- Omnicom cuts 6,100 jobs (from about 79,000).
- Second quarter revenue down almost by a quarter to $US2.8 billion.
- Net loss of $24.2 million compared to a positive $US370.7 million in the second quarter of 2019.
Revenue at Omnicom was smashed by the economic fallout of the pandemic in the June quarter.
The world’s second largest advertising group posted a net loss of $US24.2 million compared to a positive $US370.7 million for the same three months in 2019.
Second quarter revenue down 24.7% to $US2.8 billion, missing analyst expectations by $US160 million.
Organic growth fell across the world: 20.7% in US, 23.7% in UK, 29.4% in Other Europe, 18.6% in Asia Pacific, 24.1% in Latin America, 39.4% in Middle East and Africa.
On the New York Stock Exchange, Omnicom shares lost 4% to close at $US54.66.
However, the company thinks the quarter is the low point.
“We think the worst is behind us,” says CEO John Wren.
“We expect our performance to vary by geography depending on how effective local governments have responded to COVID and in turn in reopening their economies.”
Organic revenue in Asia Pacific: Greater China agencies were down just over 20% in the quarter, while agencies in Australia, Japan and India did “a bit better”.
During a briefing of analysts, Wren revealed for the first time the extent of job cuts in response to the coronavirus crisis.
“In response to the decline in spend by our clients, we took very difficult and permanent actions during the quarter to reduce our costs and preserve the strength of our business,” says Wren.
“They included aligning our staff levels agency by agency with client demand for our services, reducing our real estate in line with headcount and begin to prepare for changes in how we use space in the future. And investing several small non-cores and underperforming businesses.
“Regrettably, we had to reduce our employees by 6,100 people.”
Cost cutting, including reducing office space, resulted in savings in the quarter of $US278 million which are expected to generate $US500 million in a year.
Excluding the impact of cost cutting, second quarter operating profit fell by about 40% to $US340 million.
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