WPP sees ‘challenging’ year ahead after profits plunge
The world’s largest advertising agency, WPP, reported a 30 per cent fall in its full year results and said the outlook for 2019 was ‘challenging’.
It’s the first set of results under new CEO Mark Read, who took over role last September from long time CEO Sir Martin Sorrell.
Pre tax profit fell 30.6 per cent to £1.46bn, revenue fell 2.6 per cent to £12.82bn and operating margins dipped 1.1 per cent to 15.3 per cent.
Basic earnings per share dived 39 per cent to 85.2p, down from 144p in 2017, and the dividend was flat year on year at 60p per share.
However, the London-based firm did manage to reduce its net debt by £466m to £4.02bn thanks to disposals.
"Our results for 2018 are at the upper end of the guidance we provided in October, with like-for-like revenue less pass-through costs down 0.4 per cent”, said Read.
Indeed, shareholders and investors in the company, which recently started a three year restructuring process, appear to be encouraged by today’s results. WPP’s shares were trading more than seven per cent higher at £8.85 a share at the market open.
"As we have said previously, 2019 will be challenging - particularly in the first half - due to headwinds from client losses in 2018”, Read added. “However, we start the year with fewer clients under review than we did in 2018, and investments in creativity and technology will further improve the competitiveness of our offer.
"Our business is performing strongly in Western Continental Europe, Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, and we are addressing our performance in the United States. Important wins such as Volkswagen in North America reflect our creative strengths, and we are making significant investments in talent in our largest market.
"We are at the beginning of a three-year turnaround plan, but WPP's new positioning as a creative transformation company with stronger, more integrated, more tech-enabled agencies is already proving effective, having driven several of our recent new business successes. As we implement our strategy in 2019 we will continue to put creativity, technology and great work for clients at the heart of our own transformation."