Saatchi goes worldwide to lift revenue

SAATCHI & SAATCHI, the struggling advertising group, is close to launching a worldwide expansion plan to boost revenues, writes Neil Thapar.

The move signals a new phase in Saatchi's recovery from financial problems that led to its near-collapse four years ago. Although the group has returned to financial stability, it is still burdened with pounds 190m debts and struggling to make profits. Last month it reported a pounds 600m loss and passed the dividend for the third year running.

However, Charles Scott, who succeeded Robert Louis-Dreyfus as chief executive last week, has masterminded a three-pronged strategy to expand the business by focusing on fast-growing markets such as China, South Korea and Latin America.

Many of the group's key multinational clients are investing heavily in those territories and are pressing Saatchi to widen its coverage there.

As a result, the group is likely to open at least two more agency offices in China to complement an existing one in Peking, and several new premises in the other areas.

Secondly, the group plans to buy out minority shareholders in several of its local agencies worldwide, including Spain, Italy and Germany. Saatchi also envisages a multi-million pound investment in computer technology to cut internal costs further.

The plans have come to light at a time of growing speculation that it might launch a pounds 50m- pounds 100m rights issue. With Saatchi already giving top priority to debt reduction, the plans could further fuel the rumours. But Mr Scott said last month that no rights issue was planned.