Today’s report that publicly listed marketing groups around the world enjoyed increasing revenues and profits last year comes as something of a surprise amidst the all-pervading economic gloom.
But perhaps it is no more than confirmation that customers take shelter with strong suppliers in times of financial stress and, by implication, regard publicly listed groups as being stronger than others.
With a track record of losses like those shown in the chart below, one might expect the management of Canada’s MDC Partners to simply throw in the towel and admit defeat. At the very least one would be expecting more uproar from shareholders and some pretty tough talking with banks.
With the annual batch of company results spewing out all over the place, it is possible to see the effects of a range of different acquisition strategies emerging (or perhaps just good or bad luck dressed up as strategies).
Earlier this year, there were a few moments when it seemed just possible that Crispin Porter & Bogusky’s Canadian parent company MDC Partners might soon make a profit. But alas that was a false impression.
MDC Partners, the expansive and ever-optimistic Canadian publicly listed marketing group, suffered a loss of US$10.1 million in the first quarter of 2010. This reduced shareholders’ funds to $102 million, leaving them dwarfed even further by net borrowings of $197 million – and that’s without taking into account deferred acquisition obligations totalling $38 million.
In a move that remains rare among publicly-listed marketing groups, M&C Saatchi has sold back 20% of the shares in its Australian business to its founding entrepreneurs. The Australia & Asia region of the company showed by far the best growth last year.
The Canadian listed marketing group MDC Partners boasted a 3.4% growth in revenue in the fourth quarter of last year, but buried in the small print was the news that it incurred a loss for the period of US$18.5 million.
This week’s announcement that the Canadian listed marketing services group MDC Partners is planning to pay dividends to its shareholders came as something of a surprise. Isn’t this the company that has run up losses of $US113 million over the years? And in the last decade has it not always relied more on loans provided by its banks than on capital invested by its shareholders?
© Haymarket Media Group Ltd.
