Rising Star Awards 2022 – October 12, Gurugram - RSVP HERE

Best Media Info

Editor’s Picks
Special
Interviews
Events
IRS
Misc
BuzzInContent
bestmediainfo logo

WPP puts Kantar up for sale amidst slow Q3 performance

WPP CEO Mark Read said a weakening of its businesses in North America and in its creative agencies dragged down the group’s performance

Mark Read

WPP CEO Mark Read has revealed plans to put Kantar up for sale, following a weakening in the network’s business for North America and its creative agencies. Releasing WPP’s financial report for the third quarter of 2018, he added there is significant opportunity to develop Kantar into the world’s leading data, insights and consulting company.

“We believe in the potential for Kantar but given our many priorities, we need to make tough choices and we believe that the best way to unlock this potential is with a strategic or financial partner,” Read explained. As such, the board has since approved a formal process to review the strategic options that will “maximise share owner value”.  It is also “envisaged that WPP will remain a share owner” with strategic links to ensure that the benefits to clients are realised.

“Preparations are underway, involving Kantar management, and unsolicited expressions of interest have been received,” Read said. “This move, together with the actions that we will continue to take, should further improve our balance sheet. In future, we will pay greater attention to capital discipline and focus our acquisition spending only on the most strategic opportunities that we can tightly integrate into our organisation.”

Reviewing WPP’s performance in large sized business pitches, Read said, “In April, independent analysts identified WPP as having the most business at risk from publicly announced client reviews among our peer group. The Ford review, which began nearly a year ago, resulted in the loss of the creative business but the retention of global activation and the majority of our work around the world. While we have lost pitches (primarily media) in relation to American Express, GSK, HSBC, Opel and United Airlines, we have retained significant business with these clients. We have also won and successfully defended business with Adidas, BP, Hilton, Mars, Mondelez, Shell, T-Mobile and GSK’s Panadol. Our successes highlight our strengths, but we need to make it simpler for clients to get the best talent and expertise seamlessly from across WPP.”

According to WPP’s Q3 financial results, slowdown was experienced in the third quarter with like-for-like revenue less pass-through costs down 1.5%. This was particularly due to North America and creative agencies, issues highlighted in interim results.

North America experienced further pressure with third quarter like-for-like revenue less pass-through costs down 5.3% after second quarter -3.3% and first half -2.9%. The UK and Western Continental Europe also both slowed with third quarter down 2.0% and 0.4% respectively.

Meanwhile, Asia Pacific, Latin America, Africa and Middle East, and Central and Eastern Europe were relatively stable with third quarter growth of 2.4%.

Read conceded that WPP had been too slow in the past to adapt structural change being faced by the industry. “We have under-invested in core parts of our business. There is much to do and we have taken a number of critical actions to address these legacy issues and improve our performance,” he acknowledged.

For the actions taken as CEO, Read said, “In April, we started immediately to develop the strategy for the new WPP that would simplify our organisation, better position our companies, invest more in creative talent, establish a common data and technology strategy and make it easier for our clients to access the many great strengths that reside within our company. At its heart is a new vision for WPP, supported by a strong culture that binds us together and makes us the most attractive destination for the best talent, allowing us to lead our industry in the future.”

“We have already begun implementing this strategy, identifying the investments and restructuring actions that are needed to simplify the company and putting teams in place in the key areas of data and technology. We moved quickly to strengthen our balance sheet, making 16 disposals to date, primarily of non-core investments, raising £704 million. As a result of this, and a renewed focus on working capital, our net debt is down £925 million compared to the same period last year,” he added.

“Since my appointment as CEO in September, we have put more of these plans into action with the creation of VMLY&R, a new brand experience agency formed by the merger of VML and Y&R; further simplification with the integration of our healthcare agencies with Ogilvy, VMLY&R and Wunderman; and key appointments in operations, clients and technology as we build an even stronger executive team at the centre of WPP,” he concluded.

Info@BestMediaInfo.com

Tags: WPP Kantar
Advertisment
Post a Comment