WPP reports full year operating loss but predicts global growth in 2021

WPP has released its preliminary results for 2020, reporting a £1.231 billion dip of -9.3% in revenue for the calendar year to £12.003 billion, with an operating loss of £2.278 billion.

There were plenty of positive signs, however, with continued recovery evident in Q4, and a reduction in net debt to £0.7 million, with WPP predicting growth in 2021 in line with industry guidance.

WPP CEO, Mark Read, called 2020 a tough year for everyone “including our people who faced the personal and professional challenges of COVID-19.

Read lauded his employees for “their commitment to our clients, support for one another and contribution to the communities we serve have been a constant source of inspiration and pride.”

WPP 2020 Results [click to enlarge]

Read said: “WPP’s performance has been remarkably resilient, thanks to these efforts and the demonstrable value of what we do for our clients.

“While revenue was significantly impacted as clients reduced spending, our performance exceeded our own expectations and those of the market throughout the year.

“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.”

WPP also pointed to its continued transformation delivering results, with VMLY&R up +2.9% in Q4.

Read added: “At the height of the pandemic we saw five years’ worth of innovation in five weeks, with a dramatic shift to digital media and ecommerce as people’s lives went online – trends on which we based our vision for WPP.

“Having modernised our client offer, refined our structure and strengthened our agency brands, we were well prepared for this shift and saw the benefits of this acceleration in parts of our business. Our strategic progress was also evident in our very strong new business performance, with key wins including Alibaba, HSBC, Intel, Uber and Unilever.

A final dividend of 14.0p per share has been proposed, in line with WPP’s new dividend policy. Meanwhile, the $620 million Kantar share buyback will resume immediately.

Read went on to flag the continued transformation of the business, with many areas of attractive growth including “the permanent shift to ecommerce, the digitisation of media and the need from our clients to convert brand purpose into action”.

“The past 12 months have demonstrated the importance and impact of communications.

“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.”

Locally, WPP AUNZ recently announced $71 million in cost savings for 2020, including $13.6 million in government subsidies received to support jobs.

The installation of  its campus model in Brisbane, Adelaide and Perth consolidates WPP’s offices in each market, saved the business $2.7 million.

WPP AUNZ’s net debt has also been significantly reduced from $121.4 million in 2019 to $17.2 million in 2020, driven by cash collections and capital management.

Earnings before interest and tax (EBIT) was $61.9 million in its full year results, down 32.6% from the previous year. Net sales also slid by 14.1%, landing on $612.3 million.


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