Aegis fills chief executive's chair and raises cash after 22% profit fall

The marketing and communications group Aegis is to face 2010 with a new chief executive and a £175m warchest for acquisitions, after reporting a 22% fall in its underlying pre-tax profits for last year. Aegis Group has gone without a chief executive for 16 months, ever since Robert Lerwill left following a disagreement with the chairman, John Napier, over the direction of the company. It finally filled the role today by promoting the head of its media buying operation, Jerry Buhlmann, who will step up on 1 May. The group, which owns businesses including the media buying agency Carat and the research firm Synovate, reported an 9.7% year-on-year fall in its organic revenues for 2009, to £1.35bn, and a 15% fall in underlying operating profits, to £170m. Operating margins slipped from 13.2% to 12.6%. It cut 6% to 7% of its workforce worldwide – between 900 and 1,050 of a 15,000-strong staff. Aegis Group also unveiled today a proposal to raise £175m through a convertible bond to "increase financial flexibility and bolt on acquisition capability". "This fulfils, in the short term, a need to restore our previous levels of acquisition and development expenditure as markets become more stable and we explore more opportunities to make related acquisitions to strengthen our market positions and provide additional capabilities whilst maintaining a conservative balance sheet," said Napier. "Acquisitions are likely to be plural rather than limited to one specific deal." Aegis said that the results were "strong in a recessionary year" and that Aegis Media, its media buying operation, had performed "robustly". "We performed well to meet market guidance in a tougher year than we initially expected," said Napier. "Aegis Media performed robustly and had excellent new business wins. Synovate recovered strongly in the second half, supported by an improvement in revenue and strong management actions on costs and overheads." Aegis Media reported a like-for-like organic revenue fall of 8.7% to £825m. Overall operating profits fell 13.5% to £150m with the company describing the division's performance as "resilient". Aegis Media's operation across Europe, Middle East and Africa saw revenues fall by 7.5% to £585m. The American operation, which has struggled and been the focus of a management restructure, saw revenues fall 17.9% year-on-year to £159m. The Asia Pacific region reported a 4% year-on-year revenue increase to £81m. The company said that 31% of Aegis Media's revenues now come from digital operations. The company cut costs by 7% or £35m year-on-year. Reasearch division Synovate saw organic revenues fall by 9.6% year on year to £521m. Aegis said that the performance of the market research industry had been "much weaker than expected" and there had been an "unprecedented contraction in revenues". Costs at Synovate, which restructured its management last year, fell 8.2% year on year or some £18.8m. • To contact the MediaGuardian news desk email [email protected] or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000. • If you are writing a comment for publication, please mark clearly "for publication".