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(Alliance News) - WPP PLC on Thursday said it fell deep into the red in the first half of 2020, with the loss driven by a drop in advertising income during the Covid-19 pandemic.
Shares in the FTSE 100 advertising and marketing firm were trading 4.2% higher at 650.20 pence each on Thursday morning in London but remain significantly down from 1.066.50p at the end of last year.
For the six months ended June 30, WPP posted a pretax loss of GBP2.58 billion, swinging from a profit of GBP409 million a year prior. This was as revenue fell 12% year-on-year to GBP5.58 billion from GBP6.37 billion and administrative expenses jumped to GBP3.23 billion from GBP443 million.
The big jump in expenses was due to GBP2.7 billion in impairments, including GBP2.5 billion in goodwill and GBP200 million in investment and other write downs.
Removing those, headline pretax profit was GBP276 million, down 44% from GBP494 million a year before.
An interim dividend of 10.0p was declared, down 56% from 22.7p a year before. WPP said it has decided to review its dividend policy "in the context of our overall capital allocation priorities". It will provide an update as part of a capital markets event near the end of the year.
Looking ahead, WPP said that assuming no further economic lockdowns, it expects earnings for the full year to be in line analysts' expectations of a 10% to 12% decline in like-for-like revenue less pass-through costs, and 10% to 13% headline operating margin.
Chief Executive Mark Read said: "Assuming there is no second wave nor major lockdown, the second quarter is expected to be the toughest period of the year, although we remain cautious on the speed of recovery."
WPP added it is on track to hit the upper end of its GBP700 million to GBP800 million cost savings target and has slashed its debt following the USD4 billion sale of its Kantar division to Bain Capital in 2019.
Cash held as at June 30 was GBP2.76 billion.
By Ife Taiwo; ifetaiwo@alliancenews.com
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