MDC Partners lost $20 million in the second quarter, while posting a 15% hike in revenues to $274 million, the company reported today. Organic revenue growth topped 8%. For the first six months of the year, the Toronto-based ad holding company said it lost more than $46 million on a 12.5% hike in revenues to nearly $510 million. First-half organic growth was nearly 7%.
Company CEO Miles
Nadal attributed the losses to “the continued impact of historical investment spending.”
MDC’s organic revenue growth performance exceeded that of other holding companies that have reported first-half results, although MDC’s revenue base is much smaller. Omnicom, for example, posted organic growth of 5.1% in the first half, but with nearly $7 billion in revenue and $500 million in net profit.
Net new business wins for MDC in the first half totaled $80 million, up more than 70% compared to the same period a year ago. The company won new assignments from Budweiser, BMW, Pfizer, Microsoft and Verizon. Nadal said the company’s auto business was up 200%, compared to a year ago, through a combination of acquisitions and organic growth.
“We like where we stand heading into the second half of the year,” Nadal said, adding that the company remains focused on cost efficiency and debt reduction.
During a conference call with analysts and investors, MDC said employee severance costs in the first half totaled $3.5 million, which Nadal said signaled that the company will cut its losses and move on in cases where investments are not producing the desired return.
While the economic outlook is cloudy, Nadal said he believes that domestically, the economy will continue to recover at a slow-to-moderate pace. Company executives remained “highly confident” that MDC would reach its previously stated revenue target for 2012 of crossing the billion-dollar revenue mark, with earnings before interest, taxes, depreciation and amortization of between $110 million and $115 million.
As to the company’s media planning and buying business, Nadal said the company is still working on creating a “cohesive, integrated offering.” Earlier this year, MDC acquired media agencies RJ Palmer and TargetCast TCM. Those acquisitions, combined with MDC’s existing properties, provide “all the pieces” for the go-to-market offering MDC envisions, he said, adding that it will take another “six to 12 months of knitting it together.”
Asked about the implications of the departure of General Motors global CMO Joel Ewanick, Nadal said it represented a “seminal opportunity for transition and insurgency” for agencies looking for a piece of GM’s business. GM management, he added, “couldn’t have been happy” with the company’s marketing effort “or they wouldn’t have made the change.”