Australia’s biggest media agency, the newly merged WPP AUNZ, has announced its financial results for the half year ended 30 June 2016 with turnover of $407.3 million in turnover and a profit of $47.2 Million.
WPP AUNZ’s Chief Executive Officer, Michael Connaghan, said: “WPP AUNZ’s results for the half year ended 30 June 2016 delivered net sales of $407.3 million, flat on the prior period (2015: $407.5 million) and headline profit before interest and tax of $47.2 million, in line with the prior period ($47.4 million). The results were delivered at a margin of 11.6%.
“The 2016 half year results are the first results presented under the name WPP AUNZ Limited, having completed the merger with the Australian and New Zealand businesses of WPP plc in April 2016. While we are still very much in the initial stages of the merger integration, it has been a very positive beginning. There has been strong engagement and collaboration from local business units and support from WPP global operations. The substantial benefits of the merger are tangible providing the Group with access to new tools, technologies and client relationships. The merger provides exciting pathways for our talented people and generates market leading services for our clients. 2016 will be a year of integration and establishing a platform for 2017 and beyond.
“During the early stages of integration the key objective has been to drive oversight and collaboration across the group. Along with Rose Herceg and Rob Currie, we have invested in senior executive positions with the appointment of: John Steedman – Chairman Media Services; Kieran Moore – CEO Public Relations and Public Affairs; and Ben Dixon – CEO Data Investment Management. The new management structure provides the oversight required to ensure our business units get the most out of being part of the largest marketing services group globally and at the same time ensure local autonomy remains intact. The structure brings together specialist expertise and allows for informed and agile decision-making.
“We have previously outlined to the market that we expect to achieve at least $15 million of annual cost synergies as a result of the merger over a period of three years. Post transaction completion, we have made investment to validate, challenge and refine the cost synergy assumptions. The simple conclusion was an enhanced confidence in reaching and exceeding projected synergy targets. While it will be challenging, they are real and achievable. While confidence and conviction is strong, the synergies will take time to impact on the results. There will be limited synergy benefits in 2016. It is a year to invest in people, systems and structures that will establish a platform for sustainable synergy realization.”
The outlook is presented on a like-for-like basis, looking at the performance of all business units in the Group as if they were owned for the entire period. The outlook excludes the impact of one off gains and costs resulting from the merger with WPP plc and other non-cash costs such as amortisation of intangible assets.
On a like for like basis, WPP AUNZ expects to deliver headline profit before interest and tax of between $140 million and $147 million (2015: $137.0 million). Connaghan said: “This represents mid-to- high single digit organic growth. We are cautious in our outlook for the Group given a flat media market, restrained client spend and a subdued macro-economic environment in key markets. The Group will achieve this organic growth through winning market share and driving cost efficiencies.”