NEWS28 August 2009

Synovate to cut more costs in wake of £3m first half loss

Financials News UK

UK— Synovate’s parent company Aegis has reported a £3.2m operating loss at the research business for the first half of 2009.

The firm said it is bringing forward a “substantial reorganisation of its activities” to reduce its cost base, and pointed out that the benefits are yet to be felt from some of the cost-cutting measures it has already taken.

Among the factors blamed for the disappointing first half performance was difficulties in the automotive market, especially in Europe.

The loss compares to a £7.9m operating profit in the same period last year.

Synovate’s reported worldwide revenue was up 5.8% to £234.5m, but on a constant currency basis it fell 10.4%, with declines in all regions. For the Aegis group as a whole, revenue was up 4.8% on a reported basis to £636.7m, but down 9.2% on a constant currency basis.

“The global market for market research proved less resilient than expected and the assumption that it would be less affected by the recession than other advertising and marketing activities proved to be incorrect, at least in the first half of 2009,” the firm said.

“Action has been taken [in] the first half to reduce Synovate’s cost base and improve sales orders, but has had a relatively limited impact in the period. The actions taken to date are now delivering significant further cost reductions and will benefit the second half… [Synovate] is bringing forward a more substantial reorganisation of its activities, both to improve its sales effectiveness and to further reduce its cost base going forward.”

The Guardian reported today that these cost reduction would constitute a “jobs cull” at Synovate, but the company was unable to confirm today what impact there would be on jobs. Aegis announced in March that it was cutting 780 jobs, but did not break down how many of those would come from Synovate.

In Asia Pacific revenue grew 24.3% on a reported basis, but on a constant currency basis there was a 5.4% decline. Weakness in the automotive market had an impact on revenues in all regions, the company said.

The firm also announced today that chief operating officer Robert Philpott (pictured) is taking over as global chief executive from Adrian Chedore, who is retiring.