LONDON (AdAge.com) -- Aegis Group will cut 5% of its global work force -- about 800 jobs -- despite a revenue surge of 21.3% to $1.92 billion in 2008. The company made the announcement at its annual results meeting.
The group's weakest performance has been in North America. Overall organic revenue growth was 6.1% for Aegis Media, but Carat U.S. saw a decline of 3%, due to a series of client losses, including Hyundai, last year.
Layoffs at Carat U.S. were made public last September via a leaked e-mail, although numbers are still unclear. "There will be no further restructuring and largely no key changes in the U.S.," said Jerry Buhlmann, CEO of Aegis Media in Europe, the Middle East and Africa. "Our new [Aegis Media] U.S. President Martin Cass is working on a recovery plan which will take time but we are confident with its progress."
Aegis Group's research arm, Synovate, performed better in the U.S. but still grew less there than in other regions. Aegis Media was strong in Europe and the Middle East. Asia Pacific, where Aegis Media revenue was up 40.7%, provided the strongest growth for both parts of the business.
"We have planned and initiated firm action to improve efficiency and reduce costs across more than 40 countries," said John Napier, chairman and acting CEO of Aegis. "The intent is to selectively address capacity, resource and variable cost elements in both divisions."
Mr. Napier said he has not held talks on a possible merger with another holding company, Havas. Vincent Bollore, Havas' chairman, owns a 29.9% stake in Aegis and has consistently attempted to get representation on the board at Aegis.
Group CEO Robert Lerwill left Aegis in November after a disagreement about the direction of the business. Mr. Napier said he does not want the job on a permanent basis and is still searching for a replacement. He said he expects to appoint a new CEO before the end of the year.
'Limited efficiency improvement'
Mr. Napier implicitly criticized Mr. Lerwill's management style by pointing out that Aegis has had a tendency to "develop capacity in advance of revenue, which has limited efficiency improvement."
Aegis said it had taken a $39.3 million "reorganization cost" hit in 2008 and has factored in a $17 million cost hit for 2009, although its cutbacks will save it $28.7 million. Profit was up 25.7% to $240 million, benefiting from the weak pound, as Aegis reports in sterling.
Acquisitions accounted for 39% of Aegis Media's revenue growth and 55% of Synovate's growth. The group said is has already won $1 billion worth of new business in the first quarter of 2009, including Kellogg in 21 markets and Vodafone in the U.K. and Turkey.