Publicis to make redundancies across UK agencies

Group will cut some of 5,000-strong UK workforce because of coronavirus slump.

Publicis: UK cuts to hit creative, media and PR
Publicis: UK cuts to hit creative, media and PR

Publicis Groupe is making redundancies across its 5,000-strong UK operation because of the coronavirus downturn.

It is understood the job cuts will affect most of the group's UK agencies, including many of its creative, media, health, production and public relations shops.

Publicis.Sapient and Kekst CNC are not part of these UK cuts because they are managed globally.

A consultation on the redundancies will begin next week – an indication that a significant number of jobs could be at risk.

A spokesman declined to comment on the magnitude of any job losses, but the UK operation saw revenue drop 9.6% on an organic basis in the first three months of the year and the coronavirus downturn has worsened since then.

The French parent company has ordered a €500m (£435m) "cost-reduction plan" across its global operations – in the region of 6% of its annual operating costs, based on previous financial reports.

Annette King, chief executive of Publicis Groupe UK, described the decision to cut jobs as "incredibly hard" in a staff memo that outlined other cost savings, including voluntary salary reductions by high earners.

"We will continue to do everything we possibly can to reduce costs and protect as many jobs as possible, but unfortunately, despite all our combined efforts, we will still have to make redundancies in some parts of our business," King said in the memo, adding it was important "to act quickly" as a client-facing business.

She added: "We’ve taken the same approach across the Groupe, with the exception of Sapient, so that everyone is treated fairly, whichever part of the business they’re in."

Publicis Groupe's top UK leaders on its executive committee, known as ComEx, have volunteered to take a 20% salary cut and other senior leaders have agreed to accept a 15% reduction.

Other UK high-earners who are paid more than £100,000 will be asked to give up 10% of salary.

The UK operation has been saving costs since March when it froze recruitment and suspended the use of freelancers and it launched Publicis Bench to move under-used talent to different agencies within the group. 

The group is also offering mental health support to UK staff who are based chiefly at two London locations in Chancery Lane, home to Saatchi & Saatchi and Leo Burnett, and White City, the HQ for the media agencies including Spark Foundry, Starcom and Zenith.

All of the big agency groups, including WPP, Omnicom, Interpublic and Dentsu Aegis Network, have been cutting costs and reducing salaries in recent weeks.

Arthur Sadoun, global chairman and chief executive of Publicis Groupe, told Campaign on Monday: "We're facing a crisis that is unparalleled in terms of its magnitude, its complexity and most probably its length."

Sadoun, who has taken a 30% pay cut, added that he was "confident" that the French group can manage its net debt, which rose to more than €4bn by the end of March following last year’s Epsilon acquisition.

Publicis Groupe is valued at €7bn. It has drawn down a €2bn credit facility to boost its finances – a move that Morgan Stanley described as "a surprise" because the bank said the group had "ample liquidity".

Morgan Stanley estimates that the global agency sector is facing an 18% revenue slump in the second quarter.

This article first appeared on PRWeek sister title Campaign

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