Sorrell: WPP Job Cuts Will Match Revenue Decline

Marcoms giant WPP is preparing to make thousands of staff redundant this year, in response to declining revenues and its £1.1bn debt-financed acquisition of TNS. Credit agencies S&P and Moody have downgraded the firm's rating from stable to negative.

CEO Sir Martin Sorrell told news service dealReporter that WPP will cut a percentage of its 112,000 global headcount for every percentage fall in revenue. 'We would make cuts in line with revenues,' he stated. 'If revenues are down 2% we will make a cut in 2% of the workforce. If they are down 3% or 4% we will reduce headcount by 3% or 4%.'

Previously Sorrell said the group had established a target of 2,000 job cuts this year. In January a WPP spokesperson had denied that the company planned to cut thousands of jobs in Western Europe and North America, as reported in the UK's Observer newspaper.

Analysts are now predicting that WPP could cut as much as a tenth of its workforce, and yesterday credit rating agency Standard & Poor revised its outlook on the group from stable to negative, on concerns over deteriorating economic and advertising conditions worldwide.

S&P said WPP has budgeted for a 2% organic decline this year, but believes that the group will suffer a greater revenue decline than budgeted. Credit rating agency Moody has also changed its rating for WPP from stable to negative, saying that the change reflected expectation that 'key debt protection measurements could well deteriorate' as the global recession takes its toll at a time when the company's balance sheet is burdened by the mainly debt-financed acquisition of TNS.

Earlier in the month, WPP reported healthy results for the full year 2008, with insight division Kantar providing 17.1% of group revenue and 12.8% of operating profit. Web sites: www.wpp.com and www.kantargroup.com .