Jobs lost at Synovate as Aegis Group moves to reduce costs

UK-- Aegis has cut 780 jobs across 40 countries, including some at its Synovate market research business, as part of a “regrettable but necessary” move to reduce costs, the group said today.

As well as Synovate, Aegis Media and the group's head office are affected by the cuts, which amount to 5% of total workforce.

Aegis said a “considerable element” of the headcount reduction had already taken place, but a spokesman would not break the numbers down further. According to the group's 2008 results, out today, Synovate made £900,000 in severance payments in the fourth quarter.

Synovate had worldwide gross revenue of £518.2m last year, up 19.7% (or 10.3% on a constant currency basis). Net revenue was £329.2m, up 20.5% (11.3%), while operating profit increased 20.9% (13.1%) to £42.2m.

Aegis said the research agency “delivered very strong growth” in Russia and Africa but ran into “tougher trading” in Belgium and Italy. France and Spain saw an improved performance thanks to the acquisition of Metra Seis.

The “exceptional” growth seen in previous years in Central and Eastern Europe and the Middle East was not fully maintained, Aegis said. This resulted in “some over resourcing, which has been addressed”.

In the Americas, Aegis said that the offshoring of data services in North America helped Synovate deliver “strong growth in underlying operating profit, despite weak US market conditions”. In Latin America, meanwhile, revenue and gross profit performance was boosted by the purchase of the CIMA Group.

Turning to Asia Pacific, Aegis said demand for research was affected by the Szechuan earthquake in May and the Olympics in August. Together with a switch to lower cost data collection methods, “these factors held gross revenue flat”. Elsewhere in the region though, Japan delivered an “excellent result” and Australia, India and Singapore also performed well, said Aegis.

The group's chairman and CEO John Napier fielded questions from analysts this morning on whether he was looking to sell Synovate. There was talk at the outset of the year that Napier had engaged Merrill Lynch to look at a possible disposal of the business, but Napier said today: “There has been no form of strategic review. We don't need one.”

Author: James Verrinder