WPP AUNZ On The Up, Predicts Increase In FY21 Profits As WPP PLC Moves In On Acquisition

WPP AUNZ On The Up, Predicts Increase In FY21 Profits As WPP PLC Moves In On Acquisition
Ally Burnie
By Ally Burnie
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WPP AUNZ has provided a positive outlook for FY21 as it expects to improve its operating profit to between $85 million and $95 million.

In an updated announcement Thursday morning, WPP AUNZ said October and November trading was in-line with internal expectations, while good momentum in recent client engagements has flown into positive expectations for FY21.

In FY20, net sales are expected to be between $607 million and $610 million, a decline of 14 to 15 per cent on FY19, primarily due to the impact of COVID-19.

FY20 Headline EBIT (earnings before interest and tax) is expected to be between $59 million and $62 million.

WPP AUNZ is also on track to deliver $70 million in cost savings for 2020, of which $50 million are sustainable cost saving measures implemented since March 2020. On an annualised basis, the sustainable cost measures are expected to provide a benefit of approximately $65 million in FY21.

Debt is estimated to be approximately $110 million as at 31 December 2020, a reduction from $128 million as at 30 September 2020.

FY21 is looking on the up for WPP AUNZ, with net sales expected to be between $630 million and $650 million.

The improved outlook combined with a cost cutting benefit of $65 million, is expected to produce headline EBIT of between $85 million and $95 million.

The predictions, according to WPP AUNZ, are on the assumption that the economy continues its recovery and there are no new material COVID-related economic impacts and restrictions.

WPP AUNZ is budgeting a material improvement in profitability in the 2021 financial year, as the economic environment strengthens leading to improved client spend, particularly in WPP AUNZ’s media investment management and advertising businesses.

WPP AUNZ’s GroupM business predicts a bounce back in media market demand in FY21, with total market
demand expected to increase by 15 per cent in FY21, returning to 2019 levels of activity at the end
of FY21.

The trading update follows another announcement this morning that WPP PLC has upped its offer to acquire the rest of its Australian operations revealing today that it was offering shareholders $0.70 cents a share.

Yesterday, WPP AUNZ shares went into a trading halt on anticipation of today’s news.

WPP PLC already owns 61.5 per cent of the local operations, however, in late November it announced plans to acquire the business in full, offering shareholders, at the time, $A0.55 a share.

The Revised Proposal of A$0.70 per share values WPP AUNZ at an implied enterprise value of A$717 million and compares to the undisturbed share price of A$0.41 per share.

 

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