Advertising agency WPP (WPP) gained 4% to 813.8p as it unveiled plans to increase its dividend annually and restart share buybacks.
Starting from the current year, it said it will grow the dividend annually and to pay out approximately 40% of headline earnings per share.
WPP said that it intends to restart share buybacks in 2021 funded by the proceeds from the divestment of market research firm Kantar.
The company also wants to cut costs by £600 million by 2025 as well as spending up to £400 million a year on acquisitions.
WPP chief executive Mark Read said: ‘The events of 2020 have only accelerated the structural changes in our industry, from the expansion of digital channels to growing demand for ecommerce solutions.
‘The actions that we have taken have positioned us well, and we are already working with 76 of our top 100 clients on ecommerce.’
REVAMP PLANS
AJ Bell investment director Russ Mould commented: ‘2020 was supposed to be the year that the turnaround strategy under CEO Mark Read moved from consolidation, or making sure things didn’t get any worse after the acrimonious departure of founder Martin Sorrell, to progressing the business.
“A global pandemic put paid to such lofty plans. Now an investor day signals how Read and his finance chief, the well-regarded John Rogers who was poached from Sainsbury’s last year, intend to fully revamp WPP.
‘One question is whether WPP’s mixed legacy, which includes an entrenched position in the market, offering influence and reach, makes up for the more analogue parts of the group or if it could be left behind by the more agile pure digital plays, like Sorrell’s own latest venture S4 Capital.
‘In the context of a year of dividend disappointment the increase in the dividend announced today and a renewed share buyback programme, plus a commitment to increase capital returns to shareholders in the longer term, will be greeted like a glass of water in a desert.’
