Cordiant, the troubled advertising holding company formerly known as Saatchi & Saatchi, indicated yesterday that its problems would persist well into the second half of the year, as both profits and revenues continued to bear the mark of client departures and restructuring costs.
Revenue in the first six months of 1995 was down marginally to pounds 374.7m from a year earlier, with profits down sharply to pounds 7.3m from pounds 21.7m, after a pounds 10.8m in exceptional restructuring costs, including severance packages paid to departing employees.
A total of pounds 3.1m was paid to Maurice Saatchi and other departing executives of the group, as the result of a negotiated settlement reached earlier this year.
Mr Saatchi's acrimonious departure late last year, following a boardroom battle over his pay, pushed the advertising company into near-crisis, resulting in the loss of key executives and major accounts, some of them to a new agency, now called M&C Saatchi, set up by the Saatchi brothers early this year.
Cordiant chairman Charlie Scott said in his statement that the loss of two major accounts, - Mars and British Airways - would be a major contributor to the expected poor performance in the second half.
In addition, the company is expected to continue to restructure operations in a strategy that has already seen the disposal of subsidiary Campbell Mithun Esty in the US and, as announced yesterday, the sale to a management group of Kobs & Draft Worldwide.
The management group will pay pounds 8.6m in cash, pounds 5.9m in the form of a 10 percent subordinated loan note and pounds 2.5m in redeemable preferred stock in a new company formed to complete the purchase. Cordiant has reserved the right to buy up to a 25 per cent stake in the new company.
Despite the client losses, Cordiant executives remained cautiously optimistic that the corner had been turned. The company won new business in the first half of the year from Comet, Johnson & Johnson, American West, Pepperidge Farm, the Royal Mail, Jamont and Eurocard. Cordiant's operating groups have again been invited to bid on major accounts in the UK.
US revenues remained flat, however, and Mr Scott conceded more work would have to be done to improve the performance of US operating units.
He said the arrival earlier this year of a new chief executive, former US food executive Bob Seelert, was aimed in part at turning these operations around.
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