WPP boss Mark Read says he expects a ”solid year of recovery” for the holding company amid the vaccine rollout after it reported a £2.79bn ($3.89bn) pre-tax loss for a Covid-ravaged 2020.
The marcomms giant’s figures were impacted by impairments of £3.1bn related to previous acquisitions. Revenue was also ”significantly impacted as clients reduced spending,” according to Read, though the company’s results were marginally ahead of market expectations.
WPP’s numbers at a glance
WPP emerged from a ’tough’ 2020, suffering a decline in like-for-like revenues of 8.2% when excluding pass-through costs. In a tentative sign that the worst may be over the fourth quarter, revenue came in at negative 6.5%, up on analysts’ expectations
In the key North American market, like-for-like revenue less pass-through costs was down 5.7% in the final quarter. This comparative success prompted WPP to claim that the US ”continued its trend of relative resilience compared to other markets,” with VMLY&R and BCW both serving as rare bright spots in the fourth quarter, the former growing by 2.9%.
This relative out performance helped offset losses at media giant GroupM, which saw a slight deterioration compared to the third quarter.
On the other side of the pond, the situation was significantly worse with UK like-for-like revenue less pass-through costs were down 7.4% in the final quarter, a slight deterioration in the third quarter.
It was left to AKQA and BCW to pull in positive numbers over the fourth quarter, posting year-on-year growth, with WPP pinning the blame on the pandemic. ”The lockdown in the UK limited the recovery in the larger integrated agencies,” the results statement said.
The prolonged lockdown also took its toll on staffing, with headcount falling to 99,830 at the end of December from 106,478 a year earlier.
Looking ahead Read remains bullish about WPP’s prospects, stating: ”We see many areas of attractive growth for WPP, from the permanent shift to e-commerce, the digitisation of media and the need from our clients to convert brand purpose into action. ”
”The demand from clients for simple, integrated solutions that combine outstanding creativity with sophisticated data and technology capability is only set to grow and, while uncertainties remain around the impact of the vaccine roll-out and economic growth, we continue to expect 2021 to be a year of solid recovery.”
Read believes that action taken in recent years to restructure the business and drag down net debt to just £0.7bn have laid the foundations for a rapid rebound. He said: ”There is no doubt that the actions we took during the previous two years to transform and simplify the business and reduce debt–to a 16-year low at the end of 2020 – played a crucial role in the strength of our response.”
As a result, forward guidance suggests a return to positive growth in the mid-single digits in like-for-like growth this year.