WPP to slash 2,000 jobs

WPP’s chief Sir Martin Sorrell has announced plans to cut up to 2,000 jobs across the world’s second largest advertising and marketing company in the wake of the on-going economic crisis.

Despite reporting a strong set of results for 2008 earlier this morning, Sorrell said WPP has a three-pronged strategy for weathering the recession, which will see the company reduce its overall headcount of 112,262 by 2% over the course of this year.

“We are targeting a 2% reduction on average, about 2,000 over the course of the year,” Sorrell confirmed.

WPP’s target of a 2% reduction in head count is in line with the agency’s forecast of a 2% year on year drop in advertising revenue in 2009.

In the final quarter of 2008, Sorrell ordered agencies to reduce staff levels to combat what was looking to be a 3.9% growth in head count for the year – to fall in line with the 1% revenue growth WPP was experiencing in the midst of the deteriorating ad market.

WPP’s results statement said: “Recent actions taken [have] moderated the rate of increase in head count, which is now more balanced with like-for-like revenue growth.

“As a proportion of revenue, variable staff costs were 7.4% in 2007 and 6.6% in 2008. These variable staff costs provide a ‘shock absorber’ to operating margins as revenues come under increasing pressure.

“We estimate that at least half of these variable staff costs can be reduced in the course of a recession.”

This morning, WPP also announced its preliminary results for 2008, which saw the group post profits of £747 million and estimate net new billings of almost £2.9 billion.

WPP’s share price increased significantly following its financial statement, up 8.22% (30.75p) to 405p.