MDC Partners narrows losses on sharply rising revenue but cash position still looks precarious

Ambitious Canada-based marcoms group MDC Partners has narrowed its first quarter losses from $10.2m to $8.7m on sharply rising revenue (up from $136m to $217m) but the company, which owns Crispin Porter + Bogusky, Kirshenbaum Bond Senecal & Partners, a chunk of LA agency 72andSunny and a recently-acquired 60 per cent of Anomaly among many others, is hardly awash with cash.

Total free cashflow including working capital (what it takes to keep the business going) showed an outflow of $30.2m against $13.5m in the first quarter of 2010.

MDC’s intrepid CEO Miles Nadal has hailed the results as ‘spectacular,’ and in revenue terms they are pretty good, but at some stage he will clearly need to put the brakes on MDC’s expansion or raise some more capital.

High-flying Crispin Porter, the star in the MDC firmament, recently lost $300m billing Burger King in the US, knocking out about 30 per cent of its income, which won’t have helped MDC’s cash position at all.

Crispin Porter has recently won some big slices of Kraft business including Mac & Cheese and Milka chocolate but Kraft is currently embarked on a process of sprinkling its accounts around various hotshops and is unlikely to contribute as much as Burger King. Milka may not be the boon it initially appeared to be either as Kraft said recently that it would back Cadbury as its lead chocolate brand in Europe.

But one thing you can rely on with Nadal and MDC is that you’ll get an exciting ride. He will be aware as anyone else of the likely predators (all the big marcoms companies) eyeing his collection of creative agencies should he be unlucky enough to fall off.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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