Continuing problems at McCann-Erickson WorldGroup and Octagon Motor Sports dragged down Interpublic Group earnings in 2002’s fourth quarter by seventy-nine percent. The company also warned it will again have to restate its operating results for previous years.

New chairman/ceo David Bell, who took over the hotseat last week from John J Dooner Junior, said with masterly understatement: “We have major work ahead of us.”

Fourth quarter net income was $20.3 million (€18.43m; £12.65m), compared year-on-year with the $96.4m posted in 2001. Earnings per share fell from 26 cents to 5 cents - dramatically below analysts’ consensus forecast of 18 cents.

Revenues sagged 3.8% to $1.67 billion from $1.73bn, while operating income dived 46% from $ $119.3m.

The roots of this dismal performance lie at McCann-Erickson and Octagon Motor Sports. The latter owns car-racing facilities and other venues both in the UK and Hong Kong and was acquired during IPG’s millennial shopping frenzy.

Interpublic reported it had identified $135.8m of primarily non-cash pretax charges, relating to asset impairments and other operating expenses at Octagon. It had also pinpointed $29.9m of pretax charges over the period 1997 to 2002 that were unrelated to Octagon.

As to 2003, the group warned it expected negative revenue comparisons through the first half of the year.

Data sourced from: Multiple origins; additional content by WARC staff