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WPP AUNZ Announces Financial Results for 2018
Advertising Agency
London, United Kingdom
Group seeks to remedy underperforming segments following profit margin slump

WPP AUNZ Limited, Australasia’s leading marketing content and communications group, today announced its financial results for the year ending 31st December 2018.

Commenting on the results John Steedman, executive director of WPP AUNZ said: “We have continued to see varied performance across our portfolio of companies in 2018. Our media, digital and public relations focused businesses have all achieved good organic growth and are performing strongly. We are disappointed that the strong performance across many of our businesses has not translated into positive Group financial results. Importantly, we have taken quick action to remedy these underperforming segments in our business. We have accelerated the pace in which we make changes to right-size the business and to allocate our capital to the areas of our business with the greatest opportunity to generate profitable growth. These initiatives will enable the company to simplify our operating structure (thus reducing costs over time), concentrate on our core businesses, invest in our people, and focus on growth."

Financial highlights

• Results in line with revised guidance:

o Net sales of $857.3 million, down 1.4% (2017: $869.9 million)

o Headline EBIT of $121.0 million, down 12.8% (2017: $138.7 million).

o Operating margin 14.1% (2017: 15.9%).

o Headline earnings per share of 8.4 cents, down 14.5% (2017: 9.8 cents).

• Final dividend of 4.0 cents per share, taking total dividends declared for the 2018 year to 6.3 cents per share (2017: 6.3 cents per share). Increase in payout ratio to 75% of headline earnings.

• Entered into new debt facilities of $520 million with a syndicate of 5 banks. Structure of facilities better aligned to business cashflow and offer improved terms.

Operational highlights

• Solid organic revenue and earnings growth in media, digital and public relations focused businesses.

• Digital businesses delivered growth through their strong service offerings in e-commerce, marketing automation and digital transformation.

• Global repositioning of creative agencies - VMLY&R and Wunderman Thompson.

• Invested in the business to support future growth: new property campus in Melbourne, state-of-the-art production infrastructure.

• Reviewing strategic options for the Kantar business in Australia/New Zealand in line with WPP plc strategic plans.

Current trading and outlook

• Overall market conditions in 2019 are expected to have varied performance in individual segments

• Further growth expected from digital and public relations focused businesses

• Global account losses create headwinds in the first half of the year for advertising and media segment.

Steedman continues: "In the 2018 year, we made significant investments for the future as we combined the strengths of traditional and digital creative agencies of VMLY&R and Wunderman Thompson, created a new Melbourne campus housing 15 agencies, and reshaped the portfolio of companies under the WPP AUNZ Group. During the year, we acquired additional WPP related entities and increased shareholdings in existing businesses where we had a minority stake, allowing us to execute on strategic initiatives with greater speed and control.

"Like almost every industry, we too, are facing structural change. We have seen rapid digital transformation, economic headwinds, market changes and we know that Chief Marketing Officers, and the C-Suite in general, are seeking agility and responsiveness when it comes to their marketing needs. Our clients look to us to help them navigate this new world and to remove any complexity that might be an impediment to growth.

"As a business, our vision is to offer a far simpler structure and to utilise technology and data wherever we can to help our clients talk to, and transact with, their customers and other key stakeholders as effectively and easily as possible."

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