NEWS27 August 2009

Ipsos cuts 400 jobs in first half – and there’s more to come

Europe Financials

FRANCE— More jobs are set to go at Ipsos in the second half of the year as CEO Didier Truchot today predicted a further 12 to 18 months of weakness in the research and marketing industries.

Around 400 staff were made redundant in the first half of the year, costing the firm €7.8m in severance. A further €2.2m in severance payments are expected to be made in the second half.

Headcount reductions will save the group some €15m in costs on an annualised basis. ‘Plan B’ – as its known – was implemented in March “when we saw that maybe we would not be able to reach our top-line target”, said Truchot.

The firm claimed in May that Plan B would not involve lay-offs. Finance chief Laurence Stoclet would not say today how many more staff would be axed before the end of the year.

Clearly the severity of the recession’s impact surprised the group. In February it said it expected the research market to show “resilience” in 2009 and that Ipsos believes “it is in a position to pursue further growth, albeit at a less brisk pace than in previous years”.

However, in a conference call with analysts this afternoon Truchot declared: “We will not grow in 2009”.

Marketing spend has declined as expected, he said, but research spend has “decreased at the same pace”.

“We do not predict any significant improvement in the second half of the year,” said Truchot. “Working with clients as we have done in the past two months, it is obvious that they are planning to keep as tight as possible all their marketing expenditures because they are still not totally comfortable with the level of consumption and how their market will grow.”

Truchot said he expects another 12 to 18 months of weakness, with 2010 flat “at best”. The research group yesterday reported first-half revenue down 3.2% to €447.8m – its first decline in group sales since 1977. Gross profit fell 1.9% to €279.7m, operating profit was down 31% to €28.4m and net profit declined 34% to €14.3m.

In spite of the gloom Truchot said acquisitions were still on the cards, particularly in developing markets. Ipsos also has its eye on specialist firms working in more mature markets.

The key criteria, he said, was the right firm at the right price – and thanks to the recession, Truchot said the company “valuation gap” seen in recent months has started to close up.