Hearn taking the helm at Cordiant in 'dire' conditions

The advertising company Cordiant Communications yesterday named David Hearn as its new chief executive, as it reported profits for the first half of the year had halved while predicting there would be no let-up in the tough market conditions any time soon.

Mr Hearn, who is currently chairman and chief executive of Cordiant's main advertising arm Bates Worldwide, will take over the reins from Michael Bungey, who is retiring from the board at the end of next March.

"We started an orderly process of succession in 2000 when I told the board I realised I wasn't invincible," Mr Bungey said, adding: "I hired David at the beginning of this year. When I hired him I knew he had extensive plc experience and thought if it worked out well at Bates, he'd be my logical successor."

The appointment, which was widely expected, came as Cordiant warned it saw no reprieve from the current "dire" market conditions in the immediate future. Shares in the firm closed up 2p at 49.5p.

"Depressed trading levels persist throughout our markets. Whilst conditions may have stabilised, I see no signs of a recovery anytime soon," Mr Bungey said.

"I think [Sir] Martin Sorrell's [the chief executive of rival firm WPP] reading that you won't see too much upside until 2004 is probably not too far out," he added.

Cordiant reported a pre-tax profit, before exceptional items, of £11.5m in the six months to 30 June, down from a profit of £22.1m in the same period a year ago. Sales fell 12 per cent to £277m as clients slashed their budgets in the face of tough economic conditions. Mr Bungey said: "This downturn has been significantly worse than anything this industry has been through before." He added: "We're not doing any worse than anyone else, it's just tough times for everyone."

The company was hit hardest in the US, where sales fell 19.5 per cent.Sales in the UK and in Continental Europe slumped 12.8 per cent and 12.2 per cent respectively. Latin America and Asia Pacific sales proved most resilient, with a fall of 1 per cent.

It said the loss of the Hyundai and Wendys accounts in the US would cut sales by around 1.5 per cent this year and by 3 per cent in 2003.

Cordiant also said yesterday it planned to take a £27m exceptional charge in the second half of the year to cover its ongoing cost-cutting programme and the integration of Bates. It said the plan would save it £22m a year.

Mr Bungey would not comment on how many more staff might be affected by the restructuring. Cordiant has already shed about 2,000 workers since the beginning of last year, trimming its workforce back to around the 8,500 level.