Interpublic sees “cautious optimism” among clients despite profit slump

Interpublic Group, owner of the McCann Erickson, Draftfcb and Lowe Worldwide agencies, has forecast “significantly improved” profitability in 2010 despite posting a 42% drop in profit for last year.

The marketing services group says operating income dropped to $341m in 2009, from $589m (£386m) in 2008 as the recession lowered its clients’ marketing spend.

Revenues fell 13.4% to $6bn (£4bn) from $6.9bn (£4.4bn) a year earlier, while international earnings, which includes revenue generated by the group’s UK–based agencies, dipped 16.4% to $2.6bn (£1.7bn).

The profit and revenue declines slowed in the fourth quarter. Revenue fell 7.4% to $909m (£596m) while operating income fell 18.9% to $268m (£188m).

The group’s chairman and CEO Michael I. Roth (pictured) says that economic conditions appear to have stabilised, and “clients are beginning to re-focus on their brands and the tone of the business is one of cautious optimism”.

“Our combination of contemporary, competitive agencies and highly disciplined financial management will be key in driving significantly improved profitability in 2010 and long-term success for IPG,” he adds.

Interpublic is the fourth of the large marketing groups to report full-year results. Publicis Groupe reported a 6.5% drop in revenues, while Omnicom reported revenues fell 12% to $11.7bn (£7.5bn) in 2009. Euro RSCG and MPG owner Havas recently posted a 7.9% drop.    

WPP is scheduled to report fourth quarter and full-year results next Thursday (5 March). 

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