Publicis to slash costs, dividend as coronavirus hurts first-quarter sales
By Matthias Blamont PARIS (Reuters) - Publicis said on Monday it planned to slash costs by 500 million euros ($545 million) by cutting management pay and halving its dividend after the coronavirus pandemic hurt first-quarter revenue. Sales at the world's third-biggest advertising company, which had originally planned to publish its quarterly figures on April 23, were down 2.9% on an organic basis in the first quarter to 2.48 billion euros
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By Matthias Blamont
PARIS (Reuters) - Publicis said on Monday it planned to slash costs by 500 million euros ($545 million) by cutting management pay and halving its dividend after the coronavirus pandemic hurt first-quarter revenue.
Sales at the world's third-biggest advertising company, which had originally planned to publish its quarterly figures on April 23, were down 2.9% on an organic basis in the first quarter to 2.48 billion euros.
The decline was better than forecasts by five banks provided by the company for a drop of between 3.5% and 8.4%.
Revenue was down 9.2% in Europe and down 1.9% in the Asia Pacific region while up 0.5% in North America.
Publicis, which competes against bigger rivals WPP and Omnicom, said it was still unable to give financial guidance due to the fallout from the pandemic
"We had a sound start to the year which confirms our business model," Chief Executive Arthur Sadoun told reporters. "But in March, we started to face big difficulties, notably in Europe."
The cancellation of major sporting events and the decimation of the luxury, entertainment and travel industries are delivering a hammer blow to a global advertising industry that was already reeling from years of tech-led turmoil.
Last month, WPP pulled its dividend and share buyback and withdrew its 2020 guidance.
On Monday, Sadoun said Publicis would put a freeze on new hires, reduce use of freelancers, delay promoting staff and review contracts with suppliers to save money.
Sadoun will take a 30% pay cut and management board will reduce its pay by 20% in the second and third quarters, while chairman of the supervisory board, Maurice Levy, has reduced his annual compensation by 30%, it said.
The company would also review capital allocation country by country, Sadoun said, adding the cost reduction plan was expected to deliver its full impact this year.
Publicis also said it would propose cutting its dividend to 1.15 euros per share from 2.3 euros previously at its annual general meeting due on May 27 and delay payment until Sept. 28.
Publicis has been banking on being able to run digital campaigns for clients in addition to its traditional creative ads as competition from Facebook and Alphabet's Google continues to squeeze revenue.
The company, which recently spent $4 billion on data-focused marketing business Epsilon and has been integrating its digital arm Publicis.Sapient, downgraded its targets twice last year.
Its shares have lost a quarter of their value this year.
(Graphic: European, U.S. media stocks suffer: https://fingfx.thomsonreuters.com/gfx/mkt/ygdvzjjyvwa/media.PNG)
(Reporting by Matthias Blamont; Editing by Mark Potter, Josephine Mason and David Evans)
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