Incepta cuts 150 jobs at Citigate after profits collapse

Incepta, the PR and marketing group, has cut 150 jobs as its profits collapsed in the face of a severe downturn in its markets.

The company, which owns the Citigate financial PR agency, saw pre-tax profits drop to £3.0m for the six months to 31 August, compared with £10.2m for the period last year. The bottom-line figure was hit by exceptional items.

The company's PR operation saw underlying revenues fall 15 per cent to £41.1m, while its specialist advertising business, which works on ads for financial companies, was hit by a 25 per cent decline in sales to £14.0m. Only marketing services, which provides point-of-sale and direct mail promotional activities, fared well, with a 5 per cent jump in underlying revenues to £28.6m.

Richard Nichols, the chief executive of Incepta, said: "These are tough markets. There is growth in marketing services but PR and advertising are more cyclical businesses. Marketing services is our real strength and we are at the top of our peer group here."

The redundancies, which amount to 7 per cent of a 2,000-strong workforce, have already taken place and fell mostly in the Citigate business. Roughly half of those affected were in the UK.

"We have no intention of taking any further action on our cost base," Mr Nichols said.

He said that revenues appear to have stabilised, with the level of sales expected for the second half to be roughly similar to that for the first six months. "But we are yet to see any evidence of an upturn.... However, we are strong financially and remain in control of our destiny," Mr Nichols said.

He said that Incepta's markets should recover before consumer media markets, which many commentators believe will not rebound until 2004.

"If stability returns to the stock market, I expect a significant wave of activity. I like to think that'll happen next year," Mr Nichols said.

Separately, media analysts at WestLB, added to the general gloomy outlook for advertising, with a research note that predicted that 2003 would again see shrinking revenues across media sectors. The broker downgraded its 2003 forecast for ad sales, from the 3 per cent growth that it had predicted, to a 1 per cent decline.