WPP results show 'sequential recovery' since lockdown
WPP today released earnings on the one-year anniversary of sending its 100,000 employees to work from home during the pandemic, and like other holding companies that have reported before it, there is a consistent theme: Not-so-down is the new up.
In a presentation to analysts, CEO Mark Read described the company’s performance since then as “resilient,” saying that there has been “sequential recovery” since lockdown.
Specifically, he said that the company’s net sales went from a 15.1% drop in the second quarter of 2020 to a 7.6% fall in the third quarter and 6.5% in the fourth. Categories including tech, consumer packaged goods and pharma, which together comprise 57% of its business, were strong, as well as digital commerce services which jumped 43%. WPP also cited $4.4 billion in net new business from clients including Alibaba, HSBC, Intel, JP Morgan, and Unilever.
“Despite our net sales being down 3.2%, we saw a 1.4% decline in our operating margin, and very pleasingly our net debt ended the year at £700 million, the lowest since 2004, so we made a lot of progress during the year,” said Read.
Here, a few highlights:
—WPP reported 2020 worldwide revenue less pass-through costs of £9.8 billion ($12.5 billion), down 10.0%. Worldwide revenue of £12.0 billion ($15.4 billion), down 9.3%.
—Worldwide revenue less pass-through costs in 2020 fell 8.2% on a like-for-like basis. WPP calculates like-for-like growth, or organic growth, at constant currency exchange rates excluding effects of acquisitions and divestitures.
—For the year, U.S. revenue less pass-through costs fell 5.8% on a like-for-like basis.
—In its global integrated agencies sector, VMLY&R was the best performer, close to flat for the year and growing in the fourth quarter. GroupM was down 4.1% in the quarter, about flat with a year earlier.
—The company anticipates its e-commerce business to rise 19% in 2021 and for connected TV spending to jump 40%.
Contributing: Bradley Johnson