Revenues down 24% at IPG's PR unit

NEW YORK: The effects of the global economic downturn hit Interpublic Group (IPG) as it reported a 24% decline in year-over-year revenues in the second quarter for its Constituency Management Group (CMG), which houses the holding company's PR firms.

NEW YORK: The effects of the global economic downturn hit Interpublic Group (IPG) as it reported a 24% decline in year-over-year revenues in the second quarter for its Constituency Management Group (CMG), which houses the holding company's PR firms. Total revenues for CMG were $226 million in Q2, which ended June 30, compared to $297 million in the second quarter of 2008.

IPG's PR firms include Weber Shandwick, GolinHarris, MWW Group, and DeVries, among others. The CMG group also includes branding and other non-advertising agencies like Jack Morton, FutureBrand, and KRC Research.

For the first half of the year, the division earned $437 million in revenues, compared to $541 million in the similar period last year, constituting a 13% organic decline.

Companywide, IPG reported net income of $27.8 million on revenues of $1.47 billion for the second quarter. That is a 71% fall in profit from the year ago period when it earned $95 million in net income. Revenues for the quarter declined 20% from a year ago, and organic revenue was down 14.5%. For the first six months of the year, IPG posted a net loss in income of $39.2 million on revenues of $2.8 billion.

By region, the US suffered less than international markets, including Europe and Asia. US revenues for the second quarter were down 14.5% from last year. In comparison, the UK was down about 38%, and Asia-Pacific, 23%.

"We have responded to the difficult market conditions with effective cost control across the organization," said Michael Roth, chairman and CEO of IPG. "We also recently took steps to further strengthen our balance sheet, which positions us to successfully move through the current economic turmoil."

Total operating expenses for the quarter were down 16% to $1.38 billion from $1.64 billion in 2008. Severance cost the company nearly $30 million in Q2. In the last nine months, though, severance has totaled $120 million as the holding company shed 4,100 employees, 9% of its work force.

IPG's results follow last week's earning reports at Omnicom and Publicis Group, which were also hit by the recession.

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