WPP has produced its first quarter figures and, handily, has stated the impact of Covid-19 – in part to show that (in its view) it was heading for a decent quarter until the virus struck, initially in China.
So for Q1 total revenue was down -4.9%; like-for-like revenue (LFL) revenue -3.8%
LFL revenue less pass-through costs (its measurement of organic growth) -3.3%, with impact of COVID-19 felt more strongly in March, at -7.9%, as expected. So It seems that WPP was growing before Covid-19.
In its top five markets: Q1 LFL revenue less pass-through costs: US -1.9% (March -3.7%); UK -4.2% (March -9.8%); Germany -4.3% (March -14.9%); Greater China -21.3% (March -29.9%); India 6.1% (March -1.1%). So the US, its biggest problem in recent years, looks much better pre-virus.
In China, where the virus originated in January, WPP says its offices are back to around 90% occupancy and it says there’s a “rapid recovery in economic activity.”
WPP won a net $1 billion of new business in Q1 – pretty creditable – even though it says a fifth of pitches have been cancelled.
In hindsight WPP CEO Mark Read’s decision to sell 60 per cent of research operation Kantar to Bain last year – thereby halving WPP’s debt – looks a stroke of genius.
Read, striking his most bullish note so far even amid the crisis, says: “We have witnessed a decade’s innovation in a few short weeks, with the way people meet, shop, work and learn increasingly reliant on technology.
We are seeing clients rapidly shift emphasis and budget into digital media and direct-to-consumer channels and continue marketing technology investments. And, while many clients are significantly impacted by a reduction in consumer demand, other sectors such as packaged goods, technology and food retail brands have been more resilient.
“As in previous downturns, those who are most prepared and most far-sighted will be at an advantage when we come through the current situation.
“At a time of great uncertainty, I am very proud of how our people and clients have responded. Despite the economic challenges that will, no doubt, be with us for some time, the way we have come together gives us real confidence in our future.”
To date WPP hasn’t made any big announcements about layoffs and the like. It now employs 107,000 people, materially down on the last couple of years, so clearly some jobs are being lost.
But, from these early numbers, it looks like there might be some light at the end of what’s been a pretty long tunnel for WPP.