Company news round-up: Aegis to make acquisitions in China and US

Their full company report, shows they made a 8.7 pct loss in full year revenue in 2009.

"We performed well to meet market guidance in a tougher than we initially expected." John Napier, interim CEO, said after a tough year pushed down revenue.

Synovate, the group's market research division swung back to profit following cost reductions.

"2009 proved to be a difficult year for the market research industry - whilst [the industry] has proven resilient during previous recessions, in 2009 it was just as negatively impacted as other industry sectors" read Aegis' statement.

"The intensification of actions highlighted at the half year, to focus on sales and reduce the cost, have resulted in the achievement of a higher level of operating profit in the second half of the year compared to 2008." it added.

Overall, net revenue at Synovate were down as Europe Middle East and Africa suffered 6.4 pct drops as the group performed very weakly in France, Germany and Spain.

This resulted in a net revenue down 2.2 pct to £321.8m and despite reduced operating costs; pricing pressures and falling margins resulted in an operating profit down 12.6 pct from 2008 (£36.9m down from £42.2m).

Meanwhile, its other division, Aegis Media - global marketing company, turned over a profit of just £150.4 million, down 4.7 pct from last year.

These weak figures reflected weaker US revenues offset slightly by Asia Pacific where the Group's Carat and Isobar agencies were 'Agency of the Year' in China.

Things may have been worse for the group had a strengthening dollar not offset some of the constant currency losses.

Aegis, which means 'Shield' in Greek, could continue to face pressures on its business in 2010.

WPP the world's largest advertising holding company said last week it expected the global industry to grow 'between 0 and 1 percent' with emerging markets expected to perform better than US and UK.

"Further, I am pleased to annouce a strengthening of the Board and management with the immediate appointment of Robert Philpott, CEO of Synovate, to the Aegis Board, and the appointment of Jerry Buhlmann as CEO of Aegis Group from May 1st, Nick and Robert have worked well together over the last 18 months and deserve full credit for the delivery of a strong performance in 2009" said John Napier, Chairman of the Group.

Our View

The management believes that solid management and long-term stability can give it the 'trump' card it needs to weather any continuing recession.

Meanwhile, the £175m bond issue, allowing the company to make acquisitions this year across China and America may also provide good upsides.

Market View

The market reaction to the results have been neutral (if slightly positive) and Panmure Gordon expects adjusted EPS of 9.09p for 2010 (up a litte from 8.58p in 2009).