Cordiant suffers heavy losses

Cordiant has revealed half-year figures showing a 29.6m pre-tax loss amid US speculation that Bates Worldwide will lose another substantial piece of North American business – the estimated $70m Miller Brewing account.

Miller has asked some of its other agencies, including Ogilvy & Mather, D’Arcy Masius Benton & Bowles and Young & Rubicam, to take a look at Bates’ work on Miller Genuine Draft, Miller Genuine Draft Light and its media operation.

DMB&B, which recently lost the worldwide Anheuser Busch business to DDB, looks in a strong position to pick up extra business.

But Bates Worldwide chairman Michael Bungey denies there is a review of the business.

“Other agencies have been asked to take a look at the work but there is categorically no review,” says Bungey. However, the Cordiant results show a particularly poor performance in the US where revenues slipped by 13.5 per cent because of client cuts and a failure to win new business.

The group results make it clear that first-half revenues were largely unaffected by the Mars and British Airways losses, totalling 288m billings, which will show up in the second-half figures. But the sale of Campbell Mithun Esty and the closure of the CME network in Europe (outside the UK) did contribute to the poor figures. Net interest increased to 10.1m on a slightly reduced average net debt figure of 130m.

The persistent debt levels will rekindle speculation that Cordiant will be forced to sell one of its main agency networks to satisfy financial demands. True North Communications, formerly FCB, is thought to be interested. Cordiant has denied such speculation, and in particular that it has been in discussions with DMB&B over a possible sale of one of the networks.

The group has agreed a $27.2m (18m) management buyout of its direct marketing agency Kobs & Draft.

Group trading profit slipped 16.6 per cent and was particularly badly hit in the US where only 700,000 was made, contrasting with the 8m UK profit. Analysts are also anticipating an additional 3.1m in severance settlement for Maurice Saatchi and those who left with him to create M&C Saatchi.

Comments

    Leave a comment