A double dose of bad news for floundering agency group Cordiant Communications sent its shares spiralling downward by over 60% on Monday.
The first blow to investor confidence came when London-based Cordiant – parent of the Bates Worldwide network – revealed it may have to suspend trading in its shares if it fails to release preliminary financial results by Thursday.
“Cordiant is now evaluating whether it can issue its preliminary results by 1 May 2003,” the group informed the City yesterday morning. “[It] recognises that, in accordance with the normal practice of the UK listing authority, trading in its shares will be suspended in the event that it is unable to issue its results by then.”
There was more bad news to come. The group also revealed that it will lose yet another major account as of October. The business in question is for Allied Domecq – owner of drinks brands such as Teachers, Beefeater Gin and Malibu – and was due to earn Cordiant £18 million ($29m; €26m) this year.
“Cordiant was notified on Friday by one of its major clients, Allied Domecq, of its intention to terminate its contract with Cordiant with effect from October 2003,” the statement continued. This loss, it estimates, will have a “substantial impact on operating profit from 2004 onwards.”
The group has been hit by a string of high-profile account defections, recent departures including Royal Mail and Woolworths (both in the UK), US burger chain Wendy’s and Hyundai. It plans to sell off most of its assets and focus on the Bates network.
Cordiant’s stock closed Monday at 10.5 pence, down by 17.75 pence (63%) over the day.
Data sourced from: MediaGuardian.co.uk; additional content by WARC staff