WPP Sees Revenue Fall, Seeks Government Loan

Marcoms giant WPP has reported a 4.9% fall in first quarter revenue, reflecting the impact of the Covid-19 pandemic, and has introduced further cost-saving measures. The group has also applied for a £600m government-backed loan.

At the end of last month, the group launched plans to make around £2bn in savings, as the impact of the lockdown hit its business. These plans included freezing its £950m share buyback scheme, funded by the sale of Kantar; ditching its final dividend; imposing a 20% pay cut on its executive committee and Board; postponing staff salary increases; freezing recruitment; and halting spending on travel, hotels and award shows. The group is also planning to save £100m by cutting back on investment in property and IT.

In a further move to bring costs down WPP has now introduced new measures including a voluntary salary sacrifice from more than 3,000 senior roles, as well as some redundancies, and some roles moved to part-time working. CEO Mark Read (pictured) also told The Telegraph that the group has applied for the £600m support loan under the Covid Corporate Financing Facility from the Bank of England, despite a confidentiality agreement required by the bank.

For the first quarter, revenue - minus pass-through costs - was £2.4bn; a 3.3% like-for-like decline, with the impact of Covid-19 felt 'more strongly' in March, when it fell 7.9%. North America was the group's best performing region, with a revenue drop of just 1.9%, while in the UK revenue fell 4.2%. Net debt was £2.8bn from £4.6bn in Q1 2019, predominantly because of WPP's sale of its majority stake in Kantar. Greater China revenue was down 21.3%, although in China WPP's offices are back to around 90% occupancy and the group says there has been 'rapid recovery' in economic activity.

The group also reported 'encouraging' net new business performance, with $1bn won in the first quarter. Read comments: 'We have witnessed a decade's innovation in a few short weeks, with the way people meet, shop, work and learn increasingly reliant on technology. We are seeing clients rapidly shift emphasis and budget into digital media and direct-to-consumer channels and continue marketing technology investments. And, while many clients are significantly impacted by a reduction in consumer demand, other sectors such as packaged goods, technology and food retail brands have been more resilient. As in previous downturns, those who are most prepared and most far-sighted will be at an advantage when we come through the current situation. At a time of great uncertainty, I am very proud of how our people and clients have responded'.

Web site: www.wpp.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.