WPP Hit Hard by Covid

Marcoms giant WPP has reported a first half loss before tax of £2.58bn, compared to a profit of £409m a year earlier; and reported revenue down 12.3% to £5.58bn, from £6.37bn. Like-for-like (LFL) revenue declined 11.5%.

In the interim results, revenue less pass-through costs was down 10.2% to £4.66b from £5.19bn on a reported basis, or down 9.5% in like-for-like terms. First half headline operating margin was 8.2%, down 3.7 points from H1 2019, as £296m cost savings offset the majority of revenue decline.

The group says it is on track to make £700m to £800m of cost savings, with around 25% of these savings expected to be permanent when the company returns to pre-Covid-19 levels. Savings have resulted from a pay cut for the executive committee and Board, postponed staff salary increases, a hiring freeze, and a halt to spending on travel, hotels and award shows. CEO Mark Read (pictured) said that with £4.7bn of liquidity, thanks to the sale of part of Kantar, the firm is delivering against its cost savings targets, and it is able to return to paying an interim dividend, which will be 10p for 2020.

Q2 LFL revenue less pass-through costs fell 15.1% - with a 9.6% fall in the US, 23.3% in the UK, 11.6% in Germany, 3.1% in China, and 25.1% in India. While current trading is showing improvement on Q2, WPP says the market remains volatile: July LFL revenue less pass-through costs were down -9.2% (US -6.1%, UK -10.5%, Germany -7.2%, Greater China -18.6% and India -15.5%). Read added that assuming there is no second wave nor further major lockdowns, the second quarter is expected to prove the toughest period of the year.

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.