WPP is facing what may be a make or break week as new CEO Cindy Rose (below) prepares to unveil the fruits of her strategic review, aided by consultants McKinsey. What that usually means are big write-offs and fierce cost-cutting. She will also reveal full year 2025 numbers, expected to be equally grim.
WPP’s problem is that it’s drowning in debt, the result, presumably, of expanding too fast in the good times. Net debt of over £3bn is now comfortably ahead of its market capitalisation – value – of around £2.9bn. This despite a string of disposals under former CEO Mark Read including 60% of research business Kantar, PR giant FGS Global and Globant, now the owner of creative network Gut.
Founder and former CEO Sir Martin Sorrell, who can’t avoid all the blame for WPP current problems, has criticised Read for “slamming brands together” without specifying what his solution would have been. He says he expects “one WPP” to be announced at the end of the month alongside hefty write-offs.
Something has to be done about the debt because every time WPP takes a step forward it takes at least one step back. Will shareholders be prepared to stump up the cash to get what was once the world’s biggest ad group (and remains a big player by revenue) and a pillar of the London stock market back on track?
That’s likely to be Rose’s biggest challenge. Otherwise a break-up looms.
