WPP CEO Mark Read has had a pretty good war so far and now he’s responded to the Covid-19 virus and consequent dramatic slowdown by scrapping its share buyback plan (saving £650m) and suspending its final 2019 dividend to save £1.1bn in total. It’s also looking for £800m in other savings including reducing executive committee salaries by 20c per cent for three months.
WPP is following on the heels of Publicis by reporting two months’ 2020 numbers, before the virus spread dramatically worldwide. Its revenues in China, where the virus hit earlier, fell 23 per cent in the period.
Overall for the two months WPP reports global revenue less pass-through costs (its preferred measurement of organic growth) up 0.4 per cent excluding China and down 0.6 per cent including China. The US, the source of much of WPP’s grief over the past two years, was down 0.9 per cent in the period, much better than its disappointing performance there in Q4 2019.
CEO Read (left) says: “The actions we have taken in the last 18 months to streamline and simplify WPP, together with raising £3.2 billion in asset disposals, have put WPP in a strong financial position. It is clear that the companies in the strongest financial position will be best placed to protect their people, serve their clients and benefit their shareholders during a period of great uncertainty, which is why we are taking the steps we are outlining today.
“Across WPP we now have close to 95 per cent of our people working effectively and productively away from their offices. I am very proud of the response from our people, who are looking out for each other and going the extra mile for clients while demonstrating the creativity, collaboration and resilience that will be key to the enduring success of WPP.
“At the same time, we are supporting many governments and international health organisations on
4 communications programmes to limit the impact of COVID-19 on our communities. The important role we are playing in helping our clients navigate a difficult time gives us great confidence in the long-term future of the company.”
WPP shares rose nearly nine per cent in early London trading this morning with the (relatively) good news from the US probably doing the most to shift sentiment. It will report full Q1 numbers ofn April 29.