WPP revenue down 2.1%; new CEO Mark Read says strategy update by year end

Estimated net new business billings of $3.2 billion were won in the first half of the year, indicating return to a strong performance

by exchange4media Staff
Published - Sep 4, 2018 4:14 PM Updated: Sep 4, 2018 4:14 PM

WPP announced its half yearly results on September 4. Reported revenue is down 2.1% at £7.493 billion, but choosing to focus on the positives as the Group won new accounts, newly appointed CEO Mark Read said, “The second quarter of 2018 was WPP’s first quarter of like-for-like growth since Q1 2017, and the company has performed strongly in terms of winning and retaining business over the period.”

Estimated net new business billings of $3.2 billion were won in the first half of the year, indicating return to a strong performance.

Commenting on the new strategy as he joins the Group at a time that is rather uncertain, Read said, “As Chief Executive, my focus will be on invigorating our company and returning the business to stronger, sustainable growth. Our review of strategy is underway, addressing our structure, our underperforming operations, particularly in the United States, and how we position the company for the future. We will provide an update by the year end.”

Speaking of the growth areas, Read said, “At our first quarter trading update, we said there was no standing still, and in the last few months we have made progress in a number of important areas.
“We have focused our efforts on providing more effectively integrated solutions to clients and, in competitive pitches, we have won or grown business with clients including Adidas, Hilton, Mars, Mondelez, Shell and T-Mobile.

“We have looked at our offering and begun to focus our portfolio through 15 disposals and divestments, including Globant and AppNexus, generating cash proceeds of £676 million so far this year, which will also strengthen our balance sheet and improve our average net debt to EBITDA ratio.
“And we have accelerated initiatives that will simplify our organisation, making it easier for us to manage and clients to access, with, for example, co-locations opened or announced in New York, Kuala Lumpur, Prague and Toronto.
“The mix of performance by geography and function and a decision to invest in the growing areas of our business resulted in a slightly lower headline PBIT margin.”

Highlights:

• Reported revenue down 2.1% at £7.493 billion, impacted by currency headwinds of 5.0%. Constant currency revenue up 2.9%, like-for-like revenue up 1.6% (Q2 up 2.4%)
• Constant currency revenue less pass-through costs up 1.4%, like-for-like revenue less pass-through costs up 0.3% (Q2 up 0.7%)
• Headline profit before interest and tax £821 million down 7.0%, down 2.3% in constant currency
• Headline PBIT margin 13.3% down 0.5 margin points reportable and constant currency, down 0.4 margin points like-for-like
• Headline profit before tax £735 million down 7.4%, down 2.5% in constant currency
• Profit before tax £846 million up 8.6%, up 14.2% in constant currency primarily reflecting net exceptional gains
• Profit after tax £705 million up 11.3%, up 16.8% in constant currency
• Headline diluted earnings per share 42.6p down 6.2%, down 1.3% in constant currency
• Diluted earnings per share 53.4p up 14.6%, up 20.3% in constant currency
• Dividends per share 22.7p flat with 2017
• Share buy-backs of £201 million, equivalent to 1.3% of the issued share capital

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