Advertising firm WPP (WPP) gained 1.5% to 925.4p as it increased its full-year dividend and resumed share buybacks despite posting a multi-billion pound loss.
The company pointed to a ‘remarkably resilient’ 2020 despite posting a 9.3% fall in revenue to £12 billion.
The company’s full year headline operating margin was 12.9%, down 1.5 points on the year before as cost savings of over £800 million offset the majority of the revenue decline.
The reported loss before tax was impacted by £3.1 billion of impairments (£2.8 billion goodwill, £0.3 billion investment and other write-downs).
As of 31 December 2020, net debt had more than halved year-on-year to a 16-year low year end level of £700 million.
‘STRENGTHENED COMPETITIVE POSITION’
Shore Capital analyst Roddy Davidson said: ‘We are encouraged to note the positive trading sentiment, very robust financial performance and positive operational momentum flagged in today’s release, which reinforces our view that management action (including: simplifying operations; improving internal cooperation; investing in technology; reducing debt and; pursuing a disciplined capital allocation policy) has strengthened WPP’s competitive position.
‘We also believe the depth of the group’s resources and its comprehensive global service offering bode well for its ability to add significant value to its diverse blue-chip client base and to bounce back as advertising spend recovers.’
His counterpart at Numis, Steve Liechti, commented: ‘While we see structural challenges, there is a credible strategic plan and shares remain a global play on better macro sentiment.’
