* WPP expects return to 2019 net sales level by 2022
* Corporate switch to e-commerce helps drive recovery
* Net sales seen falling 8.4% in 2020
* Shares up 3.6%
(Adds reaction, industry context)
By Kate Holton
LONDON, Dec 17 (Reuters) - The world's biggest advertising
company WPP expects its net sales to bounce back to
pre-pandemic levels earlier than previously forecast thanks to
the rapid global corporate switch to e-commerce and digital
services.
The owner of the Ogilvy, Grey and GroupM agencies was hit
hard this year when firms slashed spending to conserve cash but
WPP said it had now achieved an industry-leading new business
performance by helping clients build e-commerce operations.
WPP said on Thursday it expected its key measurement of
underlying net sales to drop 8.4% in 2020 before rising by a mid
single digit percentage next year and reaching pre-pandemic
levels in 2022. It then expects annual growth of 3% to 4%.
Chief Executive Mark Read said the business had proved more
resilient than many had expected and a strategy set out two
years ago to offer clients a combination of digital expertise
with data and creativity had proved invaluable during 2020.
"COVID has accelerated many of the trends," he told Reuters.
"The shift to digital media, the explosion of e-commerce, the
importance of purpose and reputation: the fundamentals of our
strategy haven't changed but COVID forced us to accelerate it."
Analysts welcomed the statement as proof that WPP could
navigate the recovery, noting that many of the financial
forecasts were ahead of expectations, though they said the group
now had to execute its plan properly.
By mid March, WPP shares had slumped almost 60% from the end
of 2019 but they have recovered steadily and were 3.6% higher on
Thursday, trimming losses for the year so far to 24%.
WPP's agencies worked with brands such as L'Oreal,
Ford and British retailer The Works to switch their
marketing and sales platforms online rapidly as the virus forced
the closure of shops.
It now plans to expand its presence in the faster-growing
digital and e-commerce sector by investing more, hiring new
staff and making targeted acquisitions, funded by gross annual
cost savings of 600 million pounds ($815 million) by 2025.
The company built by Martin Sorrell also vowed to reinstate
its share buyback programme in 2021 and pay a progressive
dividend.
CEO Read said sectors that had been floored by the pandemic,
such as airlines and cruise liners, were starting to prepare for
a recovery next year though momentum could change day to day.
Hopes in recent weeks of a return to some normality have
been driven by the launch of a vaccine but surging COVID-19
cases across Europe in the last week alone have since cast a
shadow over the short-term outlook.
($1 = 0.7365 pounds)
(Reporting by Kate Holton; Editing by Guy Faulconbridge, Paul
Sandle and David Clarke)