Cordiant cruises into the black

Cordiant, the advertising giant, moved convincingly into the black in the first half of 1996, confirming a return to form following the disastrous departure of the founders Charles and Maurice Saatchi in early 1995.

Margins recovered in the US and the UK, with most of the business lost to the Saatchi brothers' rival firm replaced by new accounts. Analysts agreed the company was on track to post full-year profits of pounds 42m, and margins of 8 per cent, much closer to the current industry norm of 10 per cent. The shares put on a penny to close at 110p.

A clearly pleased Bob Seelert, the company's American chief executive, said: "It is nice to talk about black ink rather than red ink."

Profits before tax climbed to pounds 15.5m in the period, compared with a loss of pounds 29.6m last time. Robert Joliffe, analyst at Hoare Govett, said: "Cordiant is delivering so far on what had been promised, and is managing to convince a sceptical investment community."

Mr Seelert conceded the road to recovery had been rough, and that there were still some disappointments among the group's international networks. The Japanese subsidiary was badly hurt by the loss of the Mars confectionery account, which wiped out profits and helped plunge the margins in the group's "rest of world" category into the red. The Continental European performance was also well below par, hurt particularly by what Mr Seelert called "client spend restraints". Cordiant was also forced to drop the Fuji film account in Europe, having won the Kodak account out of the US.

The US market performed ahead of expectations, with margins recovering sharply to just over 5 per cent from a dismal 0.5 per cent. The UK market was particularly cheering, with margins exceeding those posted elsewhere in the group.

Despite the impressive recovery, the US group executive John Fitzgerald, who joined Cordiant amid great fanfare earlier this year, may be moved out of his senior position, and could leave the company altogether.

Mr Seelert declined to comment on suggestions that there had been personality clashes between Mr Fitzgerald and his colleagues, but insiders said the executive's role within the group was "subject to a re-evaluation".

Looking ahead, Mr Seelert said that revenues in the second half were unlikely to grow as strongly, but margins would improve. Analysts suggested that margin recovery would give the company sharply higher profits in 1997. Estimates for next year range to as high as pounds 60m.

The figures suggest that Cordiant, formerly Saatchi & Saatchi, has shaken off the whiff of desperation that had settled on the group after the departure of Charles and Maurice Saatchi.