M&C Saatchi's board and senior management have already committed to a 20 per cent salary reduction. The company is also in redundancy talks, although these started prior to the coronavirus crisis.
It follows a "sharp drop in demand across the group". However, the firm added that it "continue[s] to pitch for new business and there are still some areas where demand for our services remains steady, eg: our talent and influencer businesses".
In a statement to the stock market this morning, M&C Saatchi – which owns PR agencies M&C Saatchi Talk and M&C Saatchi Sport & Entertainment – said it "began to feel the impact of COVID-19 in March, with a reduction in activity in several of our markets following government restrictions on movement and the consequent reduction in economic activity".
The London-headquartered group said its performance was "substantially weaker" in March than in January and February, and it was "not possible to accurately predict the scale or duration of the impact" of the crisis.
The company said it will be "securing government support to furlough staff in the UK, the US and Australia". The furlough process sees governments pay 80 per cent of the employee's wage for a defined period, capped at a set amount (£37,000 in the UK).
The statement added: "For a very large proportion of higher paid, non-furloughed staff we are reducing salaries. The group's board and senior management team have already committed to a 20 per cent reduction in their salaries. We regretfully commenced consultation with a number of employees across the group about possible redundancy before the recent escalation in the COVID-19 crisis and this process will continue."
M&C Saatchi did not state how many staff members are subject to redudancy or furlough procedures, or where they work in the business. A spokeswoman told PRWeek that the company is "supporting everyone, furloughing where they can and having voluntary salary reductions where they can’t".
M&C Saatchi has suspended shareholder payments "until further notice", which includes the final dividend to shareholders.
M&C Saatchi, which prior to the coronavirus had been dealing with the fallout from the scandal that followed a multimillion-pound accounting error in 2019, outlined other areas in which it is reducing costs.
These include "the elimination of significant rent, IT and travel expenditure and reduced capital expenditure in the London head office".
"In addition, we have improved the group's cashflow and working capital through deferrals of tax and rent through instituting a daily review of cash outflows and receipts and working with our clients to ensure payments are received on a timely basis," it stated.
M&C Saatchi said its agencies "continue to operate and serve our clients, with the majority of offices currently operating a remote working policy".
In January, M&C Saatchi announced it was merging two of its PR shops - M&C Saatchi Public Relations and Talk.Global - to form M&C Saatchi Talk.
Yesterday WPP announced a wide range of cost-cutting and cash-saving measures to protect profitability, where possible, and conserve jobs as it copes with the severe financial fallout from the pandemic.