WPP has released its financial results for the first half of 2020, and while profits and revenue have been hit by the global Covid-19 pandemic, the holding company’s CEO Mark Read is cautiously optimistic about recovery in the rest of the year to come.
“After two months in which our strategic progress could be measured by growth outside Greater China, the second quarter saw an inevitable downturn, with like-for-like revenue less pass-through costs declining by 15%, albeit better than our expectations. Assuming there is no second wave nor major lockdowns, the second quarter is expected to be the toughest period of the year, although we remain cautious on the speed of recovery,” he said.
The profits for the group in H1 were £382m, compared to £617m for the same period in 2019, representing a 37.8% like for like decrease. The headline figures show that H1 reported revenue is 12.3% down, with like-for-like revenue down 11.5%. The worst downturn was experienced in the second quarter, with LFL revenue down 18.4%, with the UK and India experiencing the most dramatic squeezes during that time.
The group has engaged in cost-cutting measures, saving £296m in the first half of the year and is said to be on track to meet the year-end target of £700m-800m. WPP says that 25% of these savings are expected to be permanent even after revenue returns to 2019 levels.
The holding company seems to have benefited from work done in recent years to restructure its creative and digital businesses, with VMLY&R (the agency formed from VML and Young & Rubicam) and Wunderman Thompson (formerly Wunderman and JWT), emerging as WPP’s best-performing integrated agencies. The past eight months have seen WPP accelerate its investment in tech and eCommerce, in line with trends in wider consumer behaviours.
“Our strategic transformation remains on track but as Covid-19 accelerates the change in our sector, we are accelerating our plans,” said Mark. “We continue to attract new talent, invest in technology and eCommerce, and train our people in the skills they need for the future, with more than 20,000 receiving accreditations from Adobe, Amazon, Facebook, Google and Salesforce this year.”
There’s also been good news in the shape of a string of new business wins, as WPP positions itself as a partner to help businesses transform at speed to meet the needs of a drastically different world.
“We are working with our clients to help them get back to business, adapt their marketing strategies at speed and reshape their operations for a new world. Brands are seeing increases in online sales of 100% and more, and we are supporting eight of our top ten clients on eCommerce strategies. Our new business record is industry-leading, at $4 billion in the first half, including wins from Intel, HSBC and Unilever, and our pipeline remains strong."
The results also revealed that the holding company was enjoying some relief in the shape of improved liquidity of £4.7billion, thanks to the sale of Kantar. In the announcement, Mark Read acknowledged the hard work done by WPP employees facing unprecedented challenges. “I would like to thank our people around the world, the vast majority of whom have been working from home and have shown great creativity, agility and collective spirit to support our clients in challenging times.”