Mixed message in the ads: Two agencies give different slant on trading outlook

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THE ADVERTISING world sent mixed signals to the market yesterday when Gold Greenlees Trott issued a profit warning hot on the heels of an upbeat trading statement from Abbott Mead Vickers.

David Abbott, chairman of AMV, described prospects for new business as 'outstanding' in his interim results statement. But GGT, in a statement to the Stock Exchange, said brokers' estimates of its profits for the year to 30 April 1994 were too optimistic.

Lorna Tilbian, media analyst at SG Warburg Securities, said: 'This is a tale of two cities really. Abbott Mead Vickers is totally different in that it has had a phenomenal new-business run which has projected it from number 10 to number 5 (in the Register-MEAL ranking of UK agencies).'

AMV won new business worth more than pounds 48m on an annualised basis in the first half of its financial year to 30 June. It is currently pitching for business worth more than pounds 54m on an annualised basis.

In contrast, GGT said that the slower-than-expected recovery in Britain had led to the deferral and/or reduction of advertising expenditure planned by a number of clients.

Despite this, pre-tax profits this year should exceed last year's while earnings per share will fall, GGT said.

In deciding the level of the full- year dividend the board will 'take account of the strong balance sheet, positive cash position and good long-term prospects'. The shares dived 50p to 225p.

AMV's turnover for the half year reflected new business won in 1992 and rose by more than 21 per cent to pounds 94.42m, compared with pounds 77.68m in 1992. But lower interest income, averaging more than pounds 7.5m in the half-year, left pre-tax profit a shade lower at pounds 1.5m against pounds 1.54m.

Earnings per share fell from 6p to 5.71p while the dividend was raised from 3p to 3.2p.

Warburg is forecasting full-year pre-tax profits at AMV of pounds 5.5m, rising to pounds 7.4m in 1994. It has cut its forecast for GGT's full-year result from pounds 6.5m to pounds 4.5m.

Ms Tilbian is recommending AMV for its earnings growth, which she predicted would be '40 per cent a year out'. She is also recommending GGT on its present weakness.

AMV shares rose 1p to 541p.

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