STW reports $50m loss after huge write down of business ahead of WPP merger
STW Group, parent company of agencies including Ogilvy and Ikon, has reported a net loss of $52.6m for 2015 after making massive write-downs to the value of some of its businesses after what it described as a difficult year.
While the company reported an underlying net profit after tax of $39.6m it has wiped $92m off the value of some of its assets, as it prepares to seal a merger with the world’s largest marketing services holding group, WPP.
CEO Mike Connaghan also used the full year results to confirm that once the merger with WPP is complete, the STW name will be retired and the group will operate under a new brand in alignment with WPP.
STW saw revenues remain flat, up just 1.6% to $416m, which saw the underlying net profit slip 13% on the previous year, as the company undertook a review to shed and merge many of its businesses.
And the surprise is… ….there’s no surprise.
Shareholders should roast this incompetence.
I find it extraordinary that for a company that performed so poorly, Connaghan’s remuneration package (Remuneration Report – p17) is listed as $942k in 2015. An increase from $913k in 2014.
That’s an absolute travesty given the FY2015 results. What was the board thinking?
“In particular, he said he saw Grey as a business that could grow under the management guidance of the STW team.”
Just like the fantastic growth experienced by current STW agencies?
Around 9 years in the role – has presided over unacceptable results throughout, yet still pulls around $1million a year.
Sir Martin, I can achieve results like this, and I’ll only charge you $750K.
Win. Win.
Do we have a deal?
Michael took over the top job at this company at an extraordinarily difficult time following the years of acquisition and as the market changed rapidly, left him with a very difficult task. Rather than be critical, not to say picky, I’d suggest he’s done a very good job to steer the show to the results he’s achieved, against the tide. There’s many who would have folded under that pressure, but not Connaghan.
@Alan I think you’d find that in the era post Singleton & Tate, acquisitions increased under Connaghan. Some of those acquisitions have now been exited, written down or merged into oblivion (I.e the one great Moon). The Asia strategy which was driven by Connaghan and Savage achieved none of the growth it promised. Sorrell himself has heavily criticised it. Meanwhile, agencies like Ikon & Ogilvy have faltered through constant management changes and key client losses. Then there’s the various village models that Connaghan & Savage pioneered – from CBA to NRMA, Myer and Vodafone. Not one of those models held on to the business or produced anything memorable for any considerable time.
I’m not sure this rap sheet can be considered ‘a very good job’.
Are the numbers lying then?
Or are you saying that’s a good result?
STW are yesterday’s news, they are not convincing any stakeholders (their own agencies included) that anything about them is any way progressive.
Agency holding companies and agencies themselves are about to endure a slow, painful death. Adtech giants — Facebook, Google, etc. — are slowly crushing them. The writing is on the wall for all concerned.
Business don’t need bloated digital agencies creating posts on Facebook. People are watching less TV and blocking more pre-roll ads. Nobody has emotional connections to banks (if they, in fact, ever did).
The evidence is borne out in the profits — Facebook could buy IPG, Omnicom, WPP and Publicis with once quarter’s profits.
Agency kids: Get out while you still can! Take a client-side job or a role at a tech company and never look back!