WPP AUNZ posts full year loss as advertising revenue slides

By AdNews | 22 February 2019

Marketing content and communications group WPP AUNZ has posted a statutory loss of $17.1 million for 2018 on top of impairments and has taken a hit to revenue from its Advertising, Media Investment Management segment.

The statutory loss was a 123% fall from the $73.3 million profit result in 2017.

The headline full year after tax profit for 2018 was $71.45 million, down 14.5%, when subtracting one-off costs including $62.5 million in impairments.

WPP AUNZ says it is in an industry facing structural change with rapid digital transformation combined with economic headwinds.

The company is responding by restructuring operations, cutting costs and concentrating on core businesses.

WPP AUNZ, an ASX-listed entity majority owned by global advertising major WPP, says it maintained solid organic revenue and earnings growth in media, digital and public relations businesses.

However, global account losses have created headwinds in the first half of the year for advertising and media segment.

In the year to December, overall revenue fell 0.4% to $1.06 billion. Margins were squeezed to 14.1%, down from 15.9% in 2017.

“We have continued to see varied performance across our portfolio of companies in 2018,” says John Steedman, executive director of WPP AUNZ.

“Our media, digital and public relations focused businesses have all achieved good organic growth and are performing strongly.

“We are disappointed that the strong performance across many of our businesses has not translated into positive Group financial results.

“Importantly, we have taken quick action to remedy these under-performing segments in our business.”

Here’s how the segments performed over the 12 months:

Steedman says “quick action” has been taken to remedy under-performing segments.

“We have accelerated the pace in which we make changes to right-size the business and to allocate our capital to the areas of our business with the greatest opportunity to generate profitable growth,” he says.

“These initiatives will enable the company to simplify our operating structure (thus reducing costs over time), concentrate on our core businesses, invest in our people, and focus on growth.”

Steedman says the industry is facing structural change.

“We have seen rapid digital transformation, economic headwinds, market changes,” he says.

“We know that chief marketing officers, and the C-Suite in general, are seeking agility and responsiveness when it comes to their marketing needs.

“Our clients look to us to help them navigate this new world and to remove any complexity that might be an impediment to growth.

WPP AUNZ is looking for a new chief executive after Mike Connaghan resigned last year.

“As a business, our vision is to offer a far simpler structure and to utilise technology and data wherever we can to help our clients talk to, and transact with, their customers and other key stakeholders as effectively and easily as possible," Steedman adds.

The company declared a final dividend of four cents a share, taking the total payout to shareholders to 6.3 cents.

The one-off costs pushing WPP AUNZ into a loss:

WPP AUNZ gave a summary of the year ahead:
 
·       Media market driven by digital and outdoor
·       Challenging market for retail and consumer facing brands
·       High growth in e-commerce, digital transformation and marketing infrastructure
·       The market is moving, and we are responding to our clients’ changing needs
 
WPP AUNZ listed five key challenges as:

·       Role of “traditional” creative agencies is being challenged
·       Clients are being disrupted
·       Consultants are competing for technology and talent
·       Facebook, Google (and others) are vying for talent and attention
·       Trust is paramount

Here’s how the company sees the market changing:

 

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