Credit: Max LaRochelle via Unsplash
WPP has cut dividends in half as company profits slump with shrinking client spend and fading new business.
Reported operating profit was down 47.8% to £221 million in the half year to June. Revenue less pass through costs dropped 4.3% to £5.026 billion on a like-for-like basis.
The company expects a full year result of -3% to -5% on a like-for-like revenue less pass-through costs basis.
The UK-based global advertising group, which foreshadowed the negative results in a market update in July detailing weak sales, client losses, a pull back on spend and a shrinking pitch runway, has ordered a review of strategy.
“It has been a challenging first half given pressures on client spending and a slower new business environment,” said outgoing CEO Mark Read.
“We have, however, made significant progress on the repositioning of WPP Media, simplifying its organisational model to increase effectiveness and reduce costs.
“Meanwhile, the acquisition of InfoSum, the launch of Open Intelligence and the continued adoption of WPP Open all strengthen our data and technology capabilities.
“The board is declaring an interim dividend of 7.5p ahead of a review of the strategy and future capital allocation policy which will be led by Cindy Rose, who succeeds me as CEO on 1 September.
“The priority is to drive sustainable growth supported by an appropriate level of financial flexibility while balancing returns to shareholders.
“WPP is a company with enormous strengths in creativity and media, technology and AI, talented people, deep client relationships and unmatched global reach.
“Throughout my seven years as CEO, technological innovation has been a constant and I believe that thanks to our investment in AI we can look to the future with confidence.”
Global Integrated Agencies like-for-like revenue less pass-through costs fell 4.5% and WPP Media was down 2.9%. Other integrated creative agencies dropped 5.8%.
North America -2.4%, UK -6%, Western Continental Europe -5.5% and Rest of World -5.4%. India was broadly flat 0.1% and China -16.6%.
The board of directors set the interim dividend at 7.5p, down from 15p. “The board recognises the importance of dividends to shareholders and today’s step balances that, creating room for our incoming CEO to review the group’s strategy and capital allocation policy while maintaining financial flexibility,” the company said.
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