WPP’s earnings slump eases on new client business
Global advertising, PR and marketing firm, WPP, has reported a 0.6% decline in like-for-like revenue for the half year and insisted its turnaround plan is on track.
Organic growth less pass-through costs - the key sales metric for WPP – fell by 1.4% in the second quarter, which was an improvement on the 2.8% decline reported in the first quarter.
New client wins from global brands such as eBay, Instagram and L’Oréal, also bolstered the company’s performance.
Investors appeared reassured by the company’s progress, as WPP’s shares bounced 6.2% higher to £9.72 on Friday morning.
The FTSE 100-listed firm said pre-tax profits fell 43.5% to £478m, which was mainly due to exceptional items and a re-evaluation of of financial instruments.
"WPP's performance in the second quarter was slightly ahead of our internal expectations but in line with our full-year guidance and three-year strategic targets”, said Mark Read, Chief Executive Officer of WPP.
“Clients are responding well to our new offer, as evidenced by recent wins and expanded assignments including from eBay, Instagram and L'Oréal.
“An encouraging number of our businesses and markets are achieving good growth.
"That said, we are still in the early stages of our three-year turnaround plan, and we remain focused on returning the company to sustainable growth over that period. Our guidance for the full year is unchanged.
"We continue to simplify WPP, with a more integrated offer for our clients, better, more collaborative working environments for our people, and less complicated management structures.
"When the Kantar transaction completes, our disposal programme will have generated proceeds of c.£3.6bn, allowing us to return significant amounts to shareholders and reduce our leverage to the low end of the target range.
"The progress we have made and the positive new business momentum are reasons for optimism.
“As a creative transformation company with stronger, more tech-enabled agencies, we are well placed for the future as clients look for modern partners to help them navigate an increasingly complex and challenging marketing landscape."
The firm said it had made a total of 44 disposals over the last 15 months, further simplifying its structure and positioning it for future growth. It also said it is continuing with its programme of investment in new leadership and creative firepower, with focus on the US