Aegis beats forecasts for 2010

  • 23 Mar 2011 12:15 PM
    Message # 551903
    Anonymous
    Media buying group reports organic revenue up 5.8% year on year to £1.45bn, and says growth will continue this year

    Media buying group Aegis reported results ahead of analysts' expectations on Thursday, with organic revenue up 5.8% year on year to £1.45bn in 2010.

    Aegis, which owns media buying operations including Carat and Vizeum and research division Synovate, cheered analysts with a confident outlook for 2011 of revenue growth "at least in line with the level" seen last year.

    The company reported a 25% fall in pre-tax profits from £91.2m to £68m, primarily due to a £25m exceptional charge from debts due from former Spanish client Nueva Rumasa.

    Aegis said "negotiations continue" to recover the debt, while the Aegis chief executive, Jerry Buhlmann, promised that the contract that led to such financial exposure was a "one-off event". "It is very, very unlikely [to occur with another client]," he said. "We have been very transparent about it."

    Stripping out the one-off charge and other exceptionals, Aegis's underlying pre-tax profits were up 7% year on year at constant currency rates to £162m. The company's share price rose 0.72%, about 1p, to 134.6p in trading this morning.

    The Aegis Media division, which accounts for 60% of group revenues, reported organic revenue growth of 5.7% last year – and 7.4% in the fourth quarter – to £886m. Operating margin at the division also increased to a healthy 18.6%, while operating profits were up 10% on a constant currency basis to £164.7m.

    However, the division performed at two speeds last year, with Europe, the Middle East and Africa – which accounts for 65% of global revenues – reporting flat figures of £579m, while the Americas operation increased its revenues by 14.5% on a constant currency basis to £189m and Asia Pacific surged by 34% to £117.7m.

    Aegis bolstered its Asia Pacific business with the £208m deal to buy Mitchell Communication Group, Australia's largest marketing company, and an 18% stake in Chinese media agency Charm Communications.

    Buhlmann said that the company would continue to seek acquisitions in 2011 – "mainly small to medium sized ... but we may consider larger ones".

    Aegis Media's Carat issued its latest report on global advertising expenditure for this year, upgrading its August 2010 forecast of 4.7% growth to 5.7%.

    Research division Synovate returned to growth last year with organic revenue up 5.9% to £572m. EMEA revenue was almost flat on a constant currency basis, with the UK "challenging". Revenue in the Americas was up 13% and Asia Pacific climbed by 6%. Operating profit rose 19% to £45m.

    "Looking ahead, despite limited medium-term visibility, we have started 2011 with increased confidence," said Buhlmann. "While we expect to continue to face a demanding and competitive market environment, Aegis is well placed to make continued strong progress."

    Net debt was £331m at the end of 2010.

    • To contact the MediaGuardian news desk email editor@mediaguardian.co.uk or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.


 

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