Its profits rose by a quarter in 2008, but that won’t stop advertising and research group Aegis cutting 780, or five percent of its global workforce, in an attempt to save almost £40 million across 40 countries to counteract the downturn in media spending. About 70 of the cuts will come from the company’s UK operations. In its preliminary 2008 results released today, the company, which owns research group Synovate and media agency Carat, announced it made revenues of £1.34 billion in 2008, a 21.1 percent rise year on year (but a 10.1 percent rise in constant currency terms) and made pre-tax profits of 116.8 million, a 25.7 rise on 2007.
– Digital revenues: Aegis grew its proportion of revenue raised from digital activities to 29 percent, up from 26 percent in 2008 and says it is making “good progress” integrating its divisions into merged offline-online teams, which will help reduce overheads. The company did well in EMEA but less so in the US, while Asia Pacific remained the group’s strongest region for growth.
– Cost cuts: The total cost of the cuts is £39.4 million, of which £27.4 million has already been spent, leaving costs of £12 million to be found this year. The company says £20 million was saved in 2008 with more savings expected this year and in 2010. CEO John Napier simply blames “weaker market conditions” and “a tendency to develop capacity in advance of revenue” following years of growth as the main causes for the cuts. Napier reportedly brought in Merrill Lynch to conduct a review of the business after becoming interim CEO in November. More after the jump…
Release | Financials
– M&A talk: Will Aegis be off-loading Synovate? Not likely says Napier (via Reuters.com): he’s been busy getting the company in shape but there don’t seem to be any divestment plans on the table right now. And what of a merger with French ad company Havas? Financier Vincent Bollere has a 29.9 percent stake in Aegies and is a major shareholder in Havas, leading to rumours of a move to combine the companies. But Napier told the investor call: “As far as these Havas rumours are concerned… they haven’t actually come up in discussion between Mr Bollore and myself.“