Staff at Cordiant Communications are bracing themselves for a wave of job cuts after the advertising giant revealed it had set aside �10m to cover severance costs.

Cordiant, formed in 1997 from the demerger of Saatchi & Saatchi, revealed it will shell out �7.3m on redundancies in the second half of the year.

The company, which employs 10,000 people, spent �2.7m in severance pay in the first half of 2001 - already more than �2.5m spent on redundancy charges in the whole of 2000.

"The current severe downturn in our markets requires that we continue to closely manage our cost base," chief executive Michael Bungey said.

While Cordiant failed to estimate how many staff would go, the provision follows reports that the firm is to axe 700 workers.

Tech slump

Cordiant blamed the slowdown, which saw underlying profits remain flat in the first half of the year, due in particular to a slide in takings from technology firms.

Takings from US tech clients showed "substantial declines", Cordiant said on Monday.

Cordiant said its overall trading conditions were likely to "remain difficult" throughout the rest of 2001.

"We see little immediate prospect for growth in our markets and consequently underlying revenues are expected to be flat at best for the year as a whole."

'Better positioned'

But the firm said the quality of its portfolio, and a drive for new clients, would help it "profit swiftly" from an upturn.

"We are better positioned than many to take advantage of the upturn when it comes," Mr Bungey said.

The company's headline profit, including earnings from agencies bought during a takeover spree, rose by one quarter to �22.1m.

Cordiant shares stood 11p, or 7.0%, higher at 160p in morning trade on Monday.

Cordiant Communications was formed in 1997 on the demerger of Saatchi & Saatchi from parent company Cordiant plc.