(Reuters) - Advertising firm Omnicom Group Inc OMC.N said on Tuesday it was cutting jobs and furloughing employees as the coronavirus lockdowns dent ad spending by clients.
The advertising giant said it had over $2.6 billion in cash and $2.9 billion in credit facility to tide over the virus crisis.
Shares of Omnicom were up 3.3% in morning trading.
The company, which counts McDonald’s, Johnson & Johnson and Volkswagen as clients, said that stay-at-home orders and store closures led to the decline and added it expects the trend to continue for the year.
Omnicom, struggling with ad budget cuts, has segued into making information campaigns related to coronavirus and worked with governments to run virus awareness initiatives.
The company, which did not disclose the number of job cuts, said a fall in revenue could hurt its operations and financial position, and the effects could be material.
“While we expect the pandemic to affect substantially all of our clients, certain industry sectors have been affected more immediately and more significantly than others,” the company said in a statement.
Omnicom said that the postponement of the Olympics in addition to other major sporting events dragged on revenue while its healthcare segment posted a rise in revenue in the quarter.
The company is also looking to review some of its non core agencies that are not performing well to bridge the fall in revenue.
The health crisis has compounded the woes of Omnicom and its peers, which already face stiff competition from tech giants like Alphabet Inc's GOOGL.O Google and Facebook Inc FB.O as clients shift more ad dollars online.
U.S. rival Interpublic Group IPG.N said last week it had cut salaries, implemented hiring freeze, deferred merit increases and furloughed employees - all to avoid job cuts as much as possible.
Satellite radio company SiriusXM Holdings Inc SIRI.O also flagged concerns that the outbreak could hit ad sales in its Pandora and SiriusXM businesses as advertisers pull back on spending.
Omnicom’s first-quarter revenue fell nearly 2% to $3.41 billion, but edged past analysts’ average estimate of $3.36 billion, according to IBES data from Refinitiv.
Reporting by Supantha Mukherjee and Neha Malara in Bengaluru; Editing by Saumyadeb Chakrabarty and Shailesh Kuber
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