Advertising firm Interpublic (IPG) - Get Report posted a loss in the second quarter, reversing last year's profit, and the company withdrew its financial guidance, saying that business conditions remain difficult to predict.
For the quarter, the company lost $13.5 million, or 4 cents a share, compared with earnings of $109 million, or 29 cents a share, last year. Interpublic had a loss from continuing operations of $23 million, or 6 cents a share.
Revenue rose 0.6% to $1.499 billion, including the benefit of currency exchange rates. Organic revenue, which the company defines as revenue in constant currency, adjusted for acquisitions and dispositions, fell 3% in the second quarter. In the U.S., reported revenue increased 1.7%, while organic revenue grew 1.4%. Internationally, revenue declined 9.6%, and organic revenue fell 8.1%.
Advertising and media revenue climbed 1.4% to $970 million in the second quarter, remaining flat in the U.S. at $500 million. Marketing services revenue dropped 0.8% to $529 million but rose 4.1% in the U.S. to $336 million.
"Business conditions remain difficult, particularly in international markets," Interpublic said in a press release. "In the United States, however, client management is increasingly focused on investing in marketing instead of cutting costs. This psychological shift could represent an inflection point which could produce a positive impact on revenue trends within six months."
The company said that while revenue comparisons improved sequentially in the second quarter, its cost structure must be further reduced to generate better profit margins. As a result, Interpublic will continue its ongoing restructuring program during the third and fourth quarters. The company said last year that it would restate some of its prior results, which led to a
Securities and Exchange Commission
investigation of its accounting.
Considering the restructuring plan and the tough business environment, Interpublic said its previous earnings guidance no longer stands. However, the company added that it continues "to believe that the back half of this year and the first six months of 2004 will finally provide a firm benchmark from which to assess Interpublic's future prospects."
Shares of Interpublic were falling 70 cents, or 5%, to $13 in Instinet trading after the close, but volume was light.