WPP has brought back its dividend after bosses declared the advertising business has weathered the worst of the coronavirus crisis.
The pandemic has hit the ad industry hard, prompting cash-strapped firms to rein in spending on marketing.
In the first six months of this year, WPP racked up losses of £2.6billion, having made a profit of £409m in the same period last year. Revenues fell from £6.4billion to £5.6billion.
Suffering: In the first six months of this year, WPP racked up losses of £2.6billion, having made a profit of £409m in the same period last year
It also wrote £2.7billion off the value of subsidiaries that have seen their earnings tumble.
But boss Mark Read (pictured) said the firm was ‘through the toughest period’ and declared an interim dividend of 10p per share – worth £123m. However, he said his optimism was based on the assumption there would not be a ‘second wave’ of coronavirus infections that prompts governments to reinstate lockdown measures.
Read said: ‘We’ve come out significantly better than we expected, although we remain cautious about the outlook about the rest of the year given the economic events.’
He added the pandemic has accelerated changes that were already happening in advertising and so therefore WPP needed to speed up its own transformation plans.
Since the exit of Sir Martin Sorrell as boss in 2018, Read has been leading a major turnaround of the business to modernise its use of technology, allow agencies to share more resources and find huge cost savings.
It is investing in technology and ecommerce, and training staff with new skills, including accreditations from Adobe, Amazon, Facebook, Google and Salesforce. Read said: ‘Brands are seeing increases in online sales of 100 per cent and more, and we are supporting eight of our top 10 clients on ecommerce strategies.’
The firm said just 300 of its 10,000 UK staff had returned to the office and that this was currently voluntary.
After its upbeat announcement, WPP’s shares rose 6.5 per cent, or 40.4p, to 664.4p. WPP previously pulled its dividend, share buyback plan and 2020 forecasts in March as it braced for the full impact of Covid-19.
Since then, it said clients in travel or hospitality had scrapped marketing to save cash – dealing a blow to sales.
But the rise in internet shopping during the pandemic has also created opportunities, with firms buying ads to advertise their online platforms.
WPP said it expected to deliver full-year sales that are in line with market forecasts – which would be a decline of around 11 per cent. Analysts at Citi said the results yesterday should calm nerves.