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Confident of further progress against 2021 targets: WPP CEO Mark Read after drop in 2019 sales

For 2020, WPP said it was aiming to match its performance last year for both organic revenue and its headline operating profit margin, which came in at 14.4%

Mark Read

For 2019 overall, WPP reported a 1.6% drop in organic sales, which excluded Kantar following the sale of a 60% stake in the data business to U.S. private equity firm Bain Capital for $3.1 billion. The sale helped the company cut its debt significantly.

For 2020, WPP said it was aiming to match its performance last year for both organic revenue and its headline operating profit margin, which came in at 14.4%. The company’s outlook did not include any possible impact from coronavirus.

The company said it will continue with simpler structure with fewer, stronger agency brands with investments in technology, HR and client & new business teams.

Flat revenue less pass-through costs and flat headline operating profit margin will be the guidance for 2020.

Reiterating 2021 targets, WPP expects organic growth in line with peers while maintaining headline operating profit margin of at least 15%.

Mark Read, Chief Executive Officer, WPP, said, “We said that we would make progress in the journey to return WPP to growth, simplifying our business and reducing our debt, and we have delivered against each of these goals – having met our guidance for 2019, achieved our restructuring targets and completed the sale of a majority stake in Kantar. The second half of 2019 was stronger than the first, with performance improving globally and in the United States, our largest market.

“Our new offer of creativity powered by technology has resonated with clients, as we’ve seen in good retention rates and important wins. New creative assignments include Instagram and Mondelez, and AXA, eBay and Hasbro were among the media wins.

“Perhaps most importantly, our clients and our people tell us that WPP has a clear new sense of purpose and is successfully instilling a culture of creativity, collaboration and openness. As we enter the second year of our three-year turnaround plan, our ability to attract and retain the best people is key to long-term growth.

“I am optimistic about the future of our industry and WPP’s position within it, although there is still much more work to do. The marketing landscape has never been more dynamic and complex: clients need our help and expertise more than ever. With our market-leading scale and global footprint, allied to the creativity of our agencies and our technology leadership, we are confident of further progress against our 2021 targets.”

Full year and Q4 financial highlights

- Continuing operations reported revenue up 1.4%, constant currency revenue +0.2%, LFL revenue flat (Q4 +0.1%)

- Including Kantar[7] LFL revenue less pass-through costs and headline operating margin delivered against guidance given at the Investor Day in December 2018 (revenue less pass-through costs -1.2% and operating margin -0.9 margin points)

- FY LFL revenue less pass-through costs -1.6% (-1.2% including Kantar); Q4     -1.9% (-1.6% including Kantar)

- FY headline operating margin 14.4%, down 1.2 margin points LFL (down 0.9 margin points including Kantar), reflecting challenging performance in specialist agencies and investing for future growth

- Reported profit before tax -21.9% driven primarily by a significant H1 2018 exceptional gain that has not been repeated (£73 million impact) and a charge on the revaluation of financial instruments versus a credit in 2018 (£238 million impact)

- Year-end net debt £1.540 billion (2018: £4.017 billion). Average net debt £4.282 billion, down £743 million in constant currency year-on-year as a result of disposals and strong cash generation

- Strong year over year improvement in net working capital of £350 million

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