Global advertising giant Interpublic Group of Companies (IPG) is reporting losses these days. Still, a lot of companies in the industry took hits during the Great Recession, and advertising is always the canary in the coal mine in terms of corporate spending trends. Yet market watchers say now may be the time to invest in Interpublic Group, which runs dozens of firms.
In the first quarter of fiscal 2011 revenue came to $1.47 billion, up 10.3 percent from the same period a year earlier. Interpublic reported an operating loss of $45.3 million, an improvement from the $59.4 million operating loss during the first quarter of 2010.
The net loss to IPG common stockholders came to $48.1 million compared to $71.5 million during the first quarter of 2010. "We are pleased to have started the year with another quarter of strong revenue growth and operating margin improvement. All of our major agencies contributed to this performance, led by our operations in the U.S. and emerging markets," says Michael I. Roth, Interpublic's Chairman and CEO.
"An increasingly fragmented and complex media landscape creates opportunity for continued growth in our sector. The strategic decisions and investments we've made in recent years position us well to deliver the highly digital, integrated and accountable marketing solutions our clients need today."
Ratings agencies are looking at the company in a new light. IPG is coming out of the recession paying down debts and increasing its revenue.
In fact, Moody's Investors Service recently upgraded the company's senior unsecured ratings to Baa3 from Baa2, which means the company is now investment grade.
"The upgrade is also based on our expectation that IPG's deleveraging trajectory demonstrated over the last few years will continue in 2011 and 2012 as it both reduces debt and improves its EBITDA and operating profit margin," says Neil Begley, senior vice president at Moody's.
IPG has already crossed the biggest hurdles getting on the right track, Moody's adds.
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