The Interpublic Group of Companies generated $1.33 billion in revenue during first-quarter 2009, down from $1.49 billion in first-quarter 2008. Despite the drop in revenue, the company’s net loss deepened, from $69.7 million in first-quarter 2008 to $73.9 million. The quarter ended March 31.
In both quarters, much of the net losses were due to operating expenses exceeding revenue. In first-quarter 2008, Interpublic generated operating expenses of $1.54 billion, or 103.9% of revenue. A year later, the $1.41 billion in operating expenses amounted to 106.2% of revenue. Salaries and related expenses amounted to 75.2% of revenue during the most recent quarter, up from 71.7% a year ago.
Interpublic’s operations consist of two segments: Integrated Agency Networks (IAN), which is comprised of Draftfcb; Lowe; McCann Worldgroup; and Mediabrands, and Constituency Management Group (CMG), which is made up of a number of specialized marketing service organizations.
During first-quarter 2009, IAN generated $1.11 billion in revenue, down from $1.24 billion in first-quarter 2008, and recorded an operating loss of $57.5 million, deeper than the $19.8 million seen a year ago. CMG pulled in $210.4 million during the most recent quarter, down from $244.1 million a year ago. That segment generated net income of $4.5 million, down from net income of $6.7 million in first-quarter 2008.
Broken out by geographic market, the U.S. accounted for $781.4 million in first-quarter 2009, down from $849.1 million during first-quarter 2008. The U.K. fell from $146.5 million to $111.5 million, while continental Europe dropped from $232.6 million to $194 million.
The Asia-Pacific region fell from $127.1 million to $107.8 million, while Latin America sliped from $65 million to $55 million. The “other” region was the only one to show gains, from $64.9 million a year ago to $75.5 million.
Clients within the automotive vertical market were quickest to pull back spending, trailed by cutbacks among the financial services sector. Spending within most other client sectors was flat, according to Interpublic.
There was one bright spot among the company’s activities. “Revenue declined across our major agency groups with the notable exception of Draftfcb,” CFO Frank Mergenthaler said during an earnings teleconference.
Mergenthaler added that Draftfcb’s growth was driven by the healthcare sector, as well as direct marketing activity.
