Interpublic, which owns the McCann-Erickson Worldwide advertising network and PR network Weber Shandwick Worldwide, said that earnings for the full year were likely to fall by about 9%. For the third quarter, earnings were likely to fall by around 7%.
Interpublic has cut its full year earnings per share expectation from 90 cents to 85 cents, and also warned that the figure of $68.5m in charges which had not been properly booked could rise to as much as $120m.
Interpublic has blamed the profits warning on problems at sports marketing company Octagon's motor sports unit, as well as wider economic difficulties. Chief financial officer Sean Orr said that Interpublic was reviewing the composition and structure of its motor sports holdings.
Shares in Interpublic fell by 4.4% or 75 cents to $16.30 when the market closed yesterday, against wider falls on the Dow Jones index.
The company's share price has been hit after revelations regarding the $68.5m in incorrectly booked revenues, relating mostly to offices that are part of McCann-Erickson Europe. It faces investigation from the Securities Exchange Commission and numerous class action lawsuits from shareholders.
John Dooner, chairman and CEO, said: "It is regrettable that we have had to revise our earnings forecast, but this new guidance reflects the difficult economic conditions we are facing around the world.
"We are dealing with our short-term issues in marketing services aggressively and directly. Among our other operating companies, many of our brands are demonstrating competitive vitality, as evidenced by encouraging new business gains."
Interpublic's results are due out on November 13.
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