WPP flags business review and debt reduction following a flat start to the year

Two weeks after Sir Martin Sorrell’s departure, WPP has released its latest market update with revenues falling 4% and joint COOs Mark Read and Andrew Scott warning the company will be looking closely at underperforming operations.

In its first quarter 2018 trading update, the group reported £3.555 billion in revenue, down 4% on the previous year which the company attributed to a stronger pound this year.

By sector, the group’s data assets proved to be the poorest performing with the data inventory management business falling 6.9%, or 2.3% on a constant currency basis.

The group’s core advertising and media investment management business, which accounts for nearly half of the organisation’s income, reported a 5.7% fall, which will be flat when adjusted for currency movements against the pound.

Regionally, North America was the weakest of the group’s regions with revenues falling 10.6%, which became a 0.2% gain after adjustment for currency movements. WPP’s performance in the Asia Pacific was slightly better with a 4.8% fall, which the company claimed was a 2.9% improvement on last year.

Across the Asia Pacific operations, WPP reported greater China, India, Japan, Thailand and Korea as all showing strong growth, with Singapore presenting challenges.

WPP did not break out its Australian operations, however the listed WPP AUNZ operation – which the group holds a 61% stake in – reported a slight increase in 2017 revenues in its annual report released in February.

In a statement, joint COOs Read and Scott indicated the company is preparing for change after in the face of a changing market: “We intend to build on these strengths by taking a fresh look at our strategy, developing a vision for the Group that recognises the challenges and opportunities presented by the structural shifts in our industry, and executing resolutely against it.

“Our priority is to focus on growth. We will proactively address the under-performing parts of our business and we need to ensure that our capital is deployed to those areas that will grow fastest and maximise shareholder value.”

The company’s debt load also increased with net debt at 31 March 2018 being £5.198 billion, compared to £4.844 billion in 2017 at current exchange rates, an increase of £354 million. The company also said it is undertaking to reduce its EBITDA to debt ratio over the next 12 to 18 months.


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