WPP sees second-quarter improvement as client wins bear fruit

WPP turns a corner in second-quarter results as new client wins bear fruit

The three-year turnaround plan underway at advertising giant WPP appears to be making some progress, according to its 2019 interim results, which were bolstered by new business from eBay, Instagram and L’Oréal.

The holding company's figures show that reported revenue rose 1.6% for the first half of the year, though like-for-like revenue was down by 0.6%. There were encouraging signs in the second quarter, however, which saw like-for-like revenue growth of 0.1%.

The company's key sales metric – organic growth less pass-through costs – dropped 1.4% in the second quarter, but this was an improvement on a 2.8% slump in the first quarter.

Average net debt meanwhile plunged by £709m to £4.384bn as a disposal programme – which has most notably seen the group offload a 60% stake in Kantar – gathered pace.

Despite this progress, reported profits before tax still slumped by 44%, although this is attributed to a £117m ‘exceptional gain’ which skewed 2018’s figures.

North America continued to prove challenging for WPP, with like-for-like revenue there down 6.2% for the second quarter and the marcomms giant acknowledging that "those WPP companies with the greatest exposure to US creative continued to decline".

"North America improved significantly in the second quarter, although still down compared with last year and remains the weakest-performing region," it said in its report. "The impact of assignment losses among automotive, pharmaceutical and FMCG clients in 2018 continues, but at a slower rate than the first quarter."

Mark Read, chief executive officer of WPP, nevertheless remained optimistic about his plan to revive the company. “Clients are responding well to our new offer, as evidenced by recent wins and expanded assignments including from eBay, Instagram and L’Oréal," he said. "An encouraging number of our businesses and markets are achieving good growth.

“That said, we are still in the early stages of our three-year turnaround plan, and we remain focused on returning the company to sustainable growth over that period. Our guidance for the full year is unchanged.

“We continue to simplify WPP, with a more integrated offer for our clients, better, more collaborative working environments for our people, and less complicated management structures.”

WPP set out its three-year turnaround plan at the tail end of last year with a promise to renew its commitment to creativity.

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