- Interim dividend per share halved
- New CEO Cindy Rose starts on 1 September
- Year-to-date shares down 53%
Shares in WPP (WPP) fell over 3% after the advertising giant reported a 7.8% fall in first-half revenue to £6.6 billion, in line with the July trading update.
Although today’s results (7 August) provided few surprises, the shares plumbed a 16-year low, and the company halved its interim dividend per share to 7.5p.
The company said its WPP Media division continued to be impacted by client losses amid a challenging macro environment.
WPP continues to expect a 2025 like-for-like revenue decline less pass-through costs of between 3% to 5% and a contraction in operating margin of between 50 to 175 basis points year-on-year excluding the impact of foreign exchange.
In July the company announced that Cindy Rose will be succeeding Mark Read as CEO from 1 September.
The advertising giant said revenue from its top 25 clients was broadly flat at 0.1% like-for-like growth in the first half.
There were new wins from Electronic Arts, Hisense, L’Oreal, Samsung, TK Maxx, Honda, Ikea, and Heineken even though there were ‘lower levels of activity at a market level.’
On the plus side, the company said that there had been further adoption of WPP Open – WPP’s AI (artificial intelligence) powered marketing platform - with circa 85% of their client-facing staff using the platform in June, up from circa 60% in March.
Mark Read CEO said: ‘It has been a challenging first half given pressures on client spending and a slower new business environment.
‘We have, however, made significant progress on the repositioning of WPP Media, simplifying its organisational model to increase effectiveness and reduce costs.
‘Meanwhile, the acquisition of InfoSum, the launch of Open Intelligence and the continued adoption of WPP Open all strengthen our data and technology capabilities.’
MODEST SELL-OFF
Danni Hewson, head of financial analysis at AJ Bell said: ‘It’s a measure of just how beaten down WPP’s share price is that today’s results only provoked a modest sell-off in the shares.
‘Rebasing the dividend takes an unpopular decision out of the hands of incoming CEO Cindy Rose. She will have plenty on her plate when she starts at the beginning of next month with a strategic review of the business.
‘At one time WPP was considered a bellwether for the wider economy – given the breadth and depth of its operations and the link between advertising spend and clients’ confidence in their future prospects. However, it is now so consumed by its own problems this wider relevance has diminished.
‘Growing advertising at Facebook and Google have cut out the ad agency middleman over the last decade with AI tools also disrupting this market. Even so WPP has fared worse than the likes of European rival Publicis which snatched the key Coca-Cola account from under its nose in March.
‘Shareholders will hope former Microsoft executive Rose can draw on her tech sector experience to help WPP recover and thrive in a new advertising landscape.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
