WPP AUNZ is taking an axe to its costs, asking its executives to take a pay cut and encouraging its 4,000 staff to reduce their hours.
"We are taking all measures we can to minimise redundancies," says the company.
The local arm of the world's largest advertising company is asking employees to work nine-day fortnights and four-day weeks.
"Many of our clients have already reduced their marketing and communications expenditure and more may continue to do so throughout this period as part of their own remedial actions," says CEO Jens Monsees and chair Robert Mactier in a letter to shareholders lodged with the ASX.
"The extent of their reduced expenditure is still unfolding but we draw some confidence from the increased communications work we are undertaking for a select number of our high-quality clients across sectors such as government, financial services, insurance, and FMCG, in response to the immediate demands of consumers and change in consumer behaviours."
In early trade on the ASX, WPP AUNZ shares were up about 14% to $0.24.
The company last week withdrew previously announced dividends, saving $37.5 million and putting the company in a stronger cash position.
Today WPP AUNZ says it's too early to have a conclusive view as to the consequences of the COVID-19 pandemic on 2020 financial year earnings but the company is closely monitoring cash flow.
The latest cost cutting:
- A voluntary cut in base salaries for paid board directors, CEO and senior leadership team;
- A voluntary program of nine-day fortnights and four-day weeks and utilisation of employee leave balances:
- Management of employee costs through a reduction in the use of freelance resources, limited new hires, a significant restriction in salary increases and a commitment to enhanced intra-group resource sharing;
- A stop to of all international and domestic business travel;
- Minimisation of capital expenditure; and
- Reduction in property footprint through consolidation of lease space.
"These actions may change as we gain further clarity over the depth and timing of the COVID-19 financial impact," says the CEO and chair.
"Other operating cost reductions will be implemented across our group in those areas where revenue declines are expected to be the most significant and lasting.
"It is important to note that we are closely monitoring government announcements in order to take advantage of any relief programmes available to us in order to reduce, as much as possible, the impact of COVID-19 on our business."
The company says its strategic transformation plan announced in February will be accelerated to "consolidate many of the functions and assets" across leading brands.
"Please be assured that your board and leadership team are moving swiftly and decisively to respond to and mitigate the extreme uncertainty and challenges that are posed by the COVID-19 crisis and utilise the many operational cost reduction levers under our control," the CEO and chair say in the letter.
"Importantly, at this time we are focused more than ever on helping our clients navigate the extraordinary operating and social conditions.
"It’s not only management, but the swift response and tremendous commitment and support from the 4,000 strong team of people at WPPAUNZ, that has been impressive over these past two weeks.
"The team is responding to the challenges with pace, focus and optimism.
"Together, we are well prepared to face into the uncertainties and come out a stronger company."
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