The local arm of WPP, WPP AUNZ, has today revealed a drop in profits of 32.6 per cent for its full year results to December 2020.
Profit before interest and tax were $61.9 million, which was down from $91.8 million from the year previous.
Total revenues for the year were $612.3 million, down 14.1 per cent from 2019.
Highlights of today’s results included:
- Continuing business earnings before interest and tax (EBIT) of $61.9 million, down 32.6% (2019: $91.8 million) but at the upper end of guidance of between $59 million and $62 million.
- Continuing business net sales of $612.3 million, down 14.1% (2019: $712.5 million), better than total ad market spend which was down 15%.2 The result was slightly ahead of guidance of between $607 million and $610 million.
- Delivered $71 million in cost savings for 2020, inclusive of government subsidies of $13.6 million.
- On an annualised basis, the sustainable cost measures are expected to provide a benefit of approximately $65 million in FY21.
- Significantly reduced net debt from $121.4 million in 2019 to $17.2 million in 2020, driven by strong cash collections and tight working capital management. We expect the benefit of early collection of media payments to partially unwind in Q1 2021.
- Renewed and extended $420 million in banking facilities in August 2020.
- Transformation strategy involves three phases: transform, strengthen and grow. All key ‘transform’ deliverables have been achieved ahead of plan.
- The strategy is being implemented over a three-year period to the end of 2022 and focuses on four areas of the market: communications, technology, experience and commerce.
- The Company will move into the ‘strengthen’ phase of its strategic roadmap in FY21. The focus in this phase is topline growth and includes initiatives to drive client engagement and expand in growing areas of the market.
- Given the improvement in market conditions and substantially stronger financial position, the Board has declared a total dividend for the 2020 year of 4.4 cents per share, fully franked. This comprises a final ordinary dividend of 2.9 cents per share, fully franked (representing a payout ratio of 71% of headline earnings per share), and the reinstatement of the special dividend payment of 1.5 cents per share, fully franked, in recognition of the Kantar sale proceeds.
- The Company is budgeting a material improvement in profitability in the 2021 financial year. Headline EBIT is expected to be between $85 million and $95 million.
Commenting on the results, WPP AUNZ CEO Jens Monsees (main photo) said: “Reflecting on the year gone by, I am extremely proud of all that our team has achieved through what has been a volatile operating environment. We are working in new ways, both as a result of the pandemic environment, but also because of the transformational initiatives we have rolled out to bring together our businesses more closely and collaboratively to better service our clients.
“Our transformation strategy means WPP AUNZ taps further into growing areas of the market like e-commerce, personalised advertising and digital consumer experience. Clients are looking to us to provide them with the skills, creativity and ideas they need to match the changing needs of their consumers.
“The feedback from our clients on the new ways we are serving them has been fantastic and makes us proud and confident in our own growth agenda in the region.
“We now move into the ‘strengthen’ phase of our transformation strategy. This is about embedding a strong foundation in our business to support growth. Our focus is on clients, talent, tech, solutions and operational excellence.
“With our creativity and technology capabilities we are well-placed to drive growth as the leading creative transformation company in Australia, New Zealand and South-East Asia” said Monsees.