Shares in Cordiant Communications fell by over 40% this morning following the issue of a profits warning by the marketing and communications agency. After closing at 95½p yesterday, shares in Cordiant had slumped to 56p in opening trade this morning.
Cordiant said “Trading conditions in our industry are currently the most difficult experienced in recent years. The downturn in marketing expenditure in North America has spread to Europe and Asia Pacific, impacting revenues in these regions. In addition, the tragic events in North America have led to both a further deterioration in full year visibility, and the cancellation of planned projects and campaigns. Consequently, it is more difficult to predict the outcome for the year. However current indications are that underlying revenues for the year as a whole will show a decline of approximately 5%, resulting in a significant reduction in profitability.”
The company has embarked on a wide-ranging programme of cost cutting including a “headcount reduction initiative” which will result in a £10 million charge in the current year. These measures are said to be on track although the company is now in the process of re-evaluating its cost base targets.
In August, Cordiant predicted jobs would be cut within its organisation following the release of its interim results (see Cordiant Prepares To Cut More Jobs As Profits Fall Flat).
