The charges come on top of $181.3m already uncovered last year, with $135.8m relating to losses at the troubled Octagon Motor Sports division, which owns the Brands Hatch racing circuit, and the remaining $29.9m at unnamed divisions, stretching back to 1997.
The collapse in profits, which were barely one-fifth of the same period last year, has been the result of what the Interpublic Group of Companies described as a "severe drop in profitability" at McCann-Erickson WorldGroup, the world's largest advertising network. Interpublic said that the group had lost $1.26bn worth of business last year.
It has also been hit by losses at Octagon, which Interpublic says it may sell or even close. It says that the book value of the division is now $70m, but that it may not be able to get the full amount for the company.
Revenue for the fourth quarter fell by 3.8% to $1.67bn, with international revenue down by 8.8% because of weakness in Japan and some Latin American markets.
The company predicts that revenue for 2003 will fall by between 1% and 4%. Interpublic has already undertaken a programme of job cuts, finishing 2002 with 50,800 staff, compared with 54,100 a year earlier.
The news pushed Interpublic's share price down to $8.59, a fall of 4.56% or 41 cents and lowest price its shares have been since July 1993.
Last week John Dooner, chairman and CEO of Interpublic, stepped down from his role to take the top job at McCann-Erickson, after the company ousted James Meekin from the top job at the agency.
Dooner was replaced by David Bell, vice-president at Interpublic and former CEO of True North. The company hopes that Bell's experience in running a listed company will reassure the market.
In a statement, Bell said: "We have major work ahead of us. The company has made strides in improving its balance sheet and liquidity. These will remain significant priorities for me, as will a commitment to achieving financial reliability and accountability, both at the holding company and within our operating units."
He added: "New business in 2002 was strong, which attests to the vitality of our brands. We must build on this progress by making the aggressive pursuit of organic growth and margin improvement a top priority. In spite of difficult circumstances, I am confident that this year will see us successfully lay the groundwork for predictable, sustainable growth."
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