Aegis organic revenues down 10.8%

31 August 2009

LONDON: Aegis, the marketing communications group, recorded a 10.8% decline in organic revenues in the first half of 2009, and warned that overall market conditions are unlikely to improve over the rest of the year.

The holding company, which owns Synovate, the market research giant, Carat, the media network, and Isobar, the digital agency group, saw total revenues reach £636.7 million ($1.03bn; €722.5m) from January to June, ahead of analysts' estimates.

Overall, however, the UK-based firm registered a loss of £2.1m during this period, down from a net profit of £30m in the same timeframe in 2008.

John Napier, its chairman and interim chief executive officer, said Aegis had "developed a clear strategy to perform resiliently in a downturn, which has delivered in more difficult market conditions than forecast."

"The rate of delivery of savings is increasing, and with strong new business wins in Aegis Media and an improved Synovate secured net revenue position, we expect to deliver a full-year profit outcome in line with the current market consensus."

In constant currency terms, Aegis Media saw total revenues decline by 7.2% in H1, including drops of 7.2% in Europe, the Middle East and Africa, 14.9% in the Americas, and 1.3% in Asia Pacific on this basis.

Conditions in Italy, Spain and Portugal proved particularly challenging, while the UK, the Nordic countries and some Eastern European markets were more resilient, with France and Germany also performing relatively well.

The US, however, exhibited "very cautious sentiment", and Aegis is now seeking to "deliver improvements in business and financial performance in Carat US" in an effort to boost its position in the world's biggest advertising market.

Revenue rose "modestly" in China, while Australia and Taiwan both saw strong annual growth, with India, Indonesia and Malaysia similarly providing upticks in sales in this region.

By contrast, Hong Kong, Japan and Singapore each delivered "declines more akin to the developed markets of the West."

Synovate saw its global revenues slide by 13.1%, demonstrating that the market research industry was "clearly more affected than expected by global economic weakness than historical precedent."

Indeed, Aegis predicted that "for the first time ever, [the] market research industry growth is expected to be lower than global GDP growth, at an estimated -4% this year."

Synovate's net revenues, in constant currency, fell by 14.5% in EMEA, 12.6% in the Americas, and 11.5% in Asia Pacific, and Aegis reported that "action has been taken the first half to reduce Synovate's cost base and improve sales orders."

Data sourced from Aegis; additional content by WARC staff