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Two of the world's leading communications groups this week issued

gloomy trading forecasts, fuelling fears that Europe and the Far East

are being hit by the US economic slowdown.

Cordiant has ruled out any immediate prospect of growing its business

and it predicts its revenues will remain at best flat for the rest of

the year. The results have fuelled reports that the group will shed 700

jobs, on top of the 400 job losses announced in June.

Michael Bungey, the group's chief executive, warned: "The severe

downturn in our markets requires that we continue to closely manage our

cost base."

Meanwhile, Publicis said it was adapting its organisation and costs,

particularly in its US operations, to reflect what it called "a

generally gloomy economy". Maurice Levy, the Publicis chairman, said:

"We do not expect any spectacular improvement in the second half of the

year."

However, Publicis insists it is bucking the trend, with organic growth

of 6.3 per cent - well above estimated worldwide expectations. Levy also

declared himself confident that adspends in specific areas, particularly

retailing, car and FMCG manufacturing, would all begin to pick up.

Cordiant, the world's ninth-largest communications group, reported

operating profits of £26.3 million for the six months to the end

of June compared with £17.5 million for the corresponding period

last year.

The flatness of the market is reflected in the tiny increase in

Cordiant's overall operating margins from 8.4 per cent to 8.5 per cent -

well below the 15 per cent target it has set itself for 2004.

Its effect has also been significant in the group's key North American

market where revenues dropped by 6 per cent as a result of substantial

drops in spending by technology clients.

In continental Europe, a strong new-business performance during the

first half of the year resulted in operating profits of £7.8

million and operating margins up from 9.8 per cent to 10.6 per cent.

Cordiant did not fare so well in Asia-Pacific and Latin America,

however, where weak trading conditions in Korea and Australia caused a

drop in margins from 10.8 per cent to 7.3 per cent.

In the UK, an improved performance by the group's ad agencies - together

with contributions from the specialist operations acquired last year -

caused a leap in operating profits from 7 per cent to 10.5 per cent and

operating profits of £6.2 million.

Publicis, the sixth-largest group, posted a 65 per cent billings

increase to more than £4.8 billion, mainly the result of last

year's acquisition of Saatchi & Saatchi and Nelson Communications.

Helping insulate Publicis is a push for new business, with United

Airlines among its new clients.

So for this year, Publicis is second only to the WPP Group in net new

billings.