Credit: Tim Umphreys via Unsplash
WPP has shed thousands of staff, mainly in its media business, and slashed bonuses as the global advertising group deals with reduced client spend and slower new business.
The company announced a strategy review to be conducted by the new CEO, Cindy Rose, who starts next month.
In the meantime, the board of directors cut dividends by half to 7.5p as the company reported further deterioration in operating conditions in June due to macro uncertainty.
“It has been a challenging first half given pressures on client spending and a slower new business environment,” said outgoing CEO Mark Read, announcing half year results.
Revenue less pass through costs dropped 4.3% to £5.026 billion on a like-for-like basis in the first half of the year.
The June quarter saw a 5.8% organic drop in net sales to £2.544 billion.
Australia was down -6.5%, the same as the UK.
Globally WPP Media was down -4.7% in the June quarter. Creative agencies fell -7.2, public relations -7.8%.
Client spend in technology and digital services, automotive and healthcare fell in the June quarter.
The company has shaved headcount 3.7%, or about 7,000, to 104,000 since the start of the year.
Staff costs were down 7.5% to £3.685 billion in the half year.
This has meant severance costs, in particular at WPP Media, of £95 million in the first half.
Staff incentive payments fell more than 60% to £59 million in the six months to June.
The company also made savings from mergers to create creative hub VML and public relations unit Burson and “simplify” the media operation.
WPP forecasts organic net revenue growth of -3% to -5% for the full year.
The company announced a “review of the strategy and future capital allocation policy” which will be led by Cindy Rose when she takes over as CEO in September.
Rose starts with a company which lost its position as the world’s biggest advertising business and whose shares have shrunk in value by two-thirds during the current CEO’s tenure.
A slide from WPP's presentation on first half results to market analysts:
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