Aegis chief shrugs off war fears to predict end of advertising recession

Aegis predicted a bounce in the European advertising market this year as it reported robust full-year profits.

Doug Flynn, the chief executive of the media buying group, signalled yesterday that the worst recession to have hit the industry for decades was drawing to a close, although he said the recovery in 2003 would be gradual. "We are coming out of the advertising recession. But like advertising recessions of the past, it will be a slow recovery."

He added: "[But] we are not bouncing along the bottom of a corrugated bath." This was in reference to the more gloomy tone of his counterpart at WPP, Sir Martin Sorrell, who has spoken of a saucer or bath-shaped downturn with "deep corrugations".

Aegis predicted that the global advertising market would rise 3.1 per cent this year and 4.3 per cent in 2004. It expects Europe to improve by 2.6 per cent this year, after a 1.3 per cent decline last year.

Asked what effect the outbreak of war would have on the industry, Mr Flynn said he expected "a hiatus of three to six days, depending on the country and the influence of the public sector broadcaster". This would be followed by "four to six weeks with a gradual recovery.... [then] a small step change upwards".

Mr Flynn also confirmed that Aegis is "evaluating" whether to bid for "all or part of" NFO, the research arm of the debt-laden Interpublic group, which was put up for sale earlier this year. Industry sources have valued the business at about $550m (£343m).

Aegis faces competition from United Business Media, a magazines and market research group, which has confirmed it is running a slide rule over NFO.

Mr Flynn's comments came as Aegis posted pre-tax profits of £35.7m against restated profits of £14m a year earlier. On an underlying basis, pre-tax profits before exceptional costs of £13.5m rose 13 per cent to £71.4m. Revenue rose 12 per cent to £591.9m, of which 3.4 per cent was organic growth. Aegis' shares slipped 0.75p to 52.75p, their lowest level for more than five years.

Aegis also unveiled the creation of a new independent media network called Vizeum. The new division, which would compete with its Carat media-buying group, would unite a number of its local media operations, such as the UK's BBJ and Germany's HMS.