Aegis reduces global workforce by 780 as Napier cuts costs

LONDON - Media buying and market research group Aegis is implementing a cost-cutting programme that will reduce its workforce by just under 5% and has pushed its 2008 statutory pre-tax profits down to £136.4m.

The cuts to its 16,800 strong workforce have been ordered by interim chief executive and chairman John Napier, who was appointed chairman in July and ousted chief executive Robert Lerwill in November.

A "considerable number" of the cuts have already been made, according to an Aegis spokeswoman, who said there would be no further redudancies at Carat US, which has already seen its headcount fall.

The impact will be spread across the company's 40 markets, both operating divisions and its head office.

Napier said the staff reductions were being made in response both to weaker market conditions and to the need to impose more financial discipline on Aegis and make wage costs more variable and flexible.

Napier said: "The intent is to selectively address capacity, resource and variable cost elements in both divisions.

"This involves a regrettable but necessary headcount reduction of just under 5% of our workforce, spread across more than 40 countries."

He criticised Aegis' previous tendency to "develop capacity in advance of revenue, which has limited efficiency improvement".

The effect of the cuts will be to save the company £20m per year but will cost it £39.4m, of which £27.4m has been charged in 2008 and the rest to 2009.

This and other extraordinary costs mean that Aegis' statutory pre-tax profits dropped 2.8% from 2007 to £136.4m.

However, the company claimed an underlying pre-tax profits rise of 25.7% to £166.8m.

Revenues rose 21.3% to £1.34bn. Aegis Media revenues totalled £824m with organic growth of 6.1% while Synovate revenues totalled £518.2m with organic growth of 5.1%.

Napier professed to feeling pleased with the company's progress to date, highlighting that cash flow was "excellent".

Aegis Media won net new business of £646m ($922.5m) in what Napier described as a "relatively quiet year for new international pitch opportunities".

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