Life after Sir Martin Sorrell is starting to look as though it’s back on track at WPP, with the holding company recording an improved second quarter for 2019.
Now led by Mark Read, the company earlier this year reported a profit slump of 30 per cent after the loss of some significant clientele, including American Express and United Airlines.
However things now look as though they could be improving slightly for WPP after the release of the second-quarter earnings report.
While organic growth less pass-through costs still fell 1.4 per cent for the quarter, this was an improvement from the 2.8 per cent slump in Q1 and it was less than half the fall expected by analysts.
Read said: “We set out a three-year plan, we are eight months in. We have made good progress.”
“I am sure there will be twists and turns on the way. The initial signs are positive, and of course we have more work to do.”
“We always said this year would be challenging with the client losses that started at the beginning of last year.
“While they persist we have had steady success in new business and done very well retaining business from existing clients.”
The report mentions WPP AUNZ “has not reported Q2 trading”, meaning local numbers have not been factored in.
North America was a region of improvement for the company, with revenue falling 5.3 per cent in the second quarter, compared with 8.5 per cent in the first three months of the year.
Organic growth in the UK was 1.3 per cent.
“Clients are responding well to our new offer, as evidenced by recent wins and expanded assignments including from eBay, Instagram and L’Oréal,” Read said.
“An encouraging number of our businesses and markets are achieving good growth.”
Dealing with debt
The company is still in a huge amount of debt, net debt currently sitting at £4.2bn ($AU7.45bn).
However, this was down £0.595bn ($AU1.055bn) year-on-year, thanks to a disposal programme which included the sale of 60 per cent of market research firm Kantar.
WPP announced it was selling the majority stake of Kantar last month to private equity firm Bain Capital for around $US3.1 billion ($A4.4 billion).
“When the Kantar transaction completes, our disposal programme will have generated proceeds of c.£3.6bn, allowing us to return significant amounts to shareholders and reduce our leverage to the low end of the target range,” Read said.