DaimlerChrysler Cost-Cutting Takes Its Toll on Headcount

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NEW YORK ( -- Omnicom Group President-CEO John Wren today confirmed that cost-cutting at German automaker DaimlerChrysler, Omnicom's largest client, is leading to staff reductions within the agency holding company.

In an earnings call with analysts, Mr. Wren acknowledged the cuts, though he didn’t specify what agencies are involved or by how much the headcount is being reduced.

“The auto industry, especially the domestic auto players, are making staff reductions and we’re also making staff reductions in those areas,” he said.

200 positions affected
Referring to a report in yesterday’s Advertising Age that up to 200 positions will be eliminated at Omnicom’s BBDO Detroit, which is dedicated to Chrysler business, Mr. Wren said: “We haven’t been asleep at the switch. For six months, we’ve had a program in place and we haven’t been filling open positions.” He said many of the cuts “aren’t real people. They’re open positions.”

Omnicom’s PHD handles media buying for DaimlerChrysler in the U.S., along with media planning for Chrysler Group and its regional dealer ad groups. Holding company sibling Merkley & Partners, New York, handles Mercedes-Benz USA’s national creative and planning.

The brief discussion of the Chrysler issues was the only down moment in an otherwise upbeat report. It was “overall an outstanding year,” said Mr. Wren.

Net income for year jumped 9%
Omnicom reported that net income for the fourth quarter of 2005 increased 7% to $252.6 million, from $236.5 million in the fourth quarter of 2004. Domestic revenue for the fourth quarter increased 9% to $1.6 billion from $1.4 billion in the prior-year period. International revenue increased 1% to $1.36 billion from $1.34 billion in the year-ago period.

For the year, net income increased 9% to $790.7 million from $723.5 million in 2004. Worldwide revenue for 2005 jumped 8% to $10.5 billion from $9.7 billion in 2004.

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Jean Halliday contributed to this report.

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