WPP Share News (WPP)

(Sharecast News) - WPP announced further cost-cutting measures on Wednesday, alongside a fall in first quarter revenue, as it bunkered down in the face of the Covid-19 coronavirus pandemic.
The FTSE 100 advertising conglomerate said its revenue in the first three months of the year fell 4.9%, while like-for-like revenue was 3.8% lower.

It said first quarter like-for-like revenue, less pass-through costs, was 3.3% lower, with the impact of Covid-19 felt more strongly in March with a drop of 7.9%, as was expected.

On a geographical basis, first quarter like-for-like revenue less pass through costs were down 1.9% in the United States, 4.2% in the UK, 4.3% in Germany, and 21.3% in Greater China, but grew 6.1% in India.

In China, WPP said its offices were back to around 90% occupancy, adding that it was seeing a "rapid recovery" in economic activity.

It also reported an "encouraging" net new business performance, with $1bn won in the first quarter.

The company talked up its "strong" liquidity and balance sheet, with average net debt standing at ?2.1bn, down ?2.1bn year-on-year, with ?4.4bn of cash and undrawn facilities.

A number of "substantial actions" had already been taken by the board to manage cash flow and profitability, including the suspension of the 2019 final dividend and share buyback programme, reductions in costs and capital expenditure, and tight controls on working capital.

On Wednesday it said further measures on costs were now being implemented, including voluntary salary sacrifice from more than 3,000 senior roles, part-time working, and some permanent headcount reductions.

WPP said plans were in place to flex costs against a range of economic scenarios, to ensure cash flow and profit remained well-managed, and the business could respond "quickly" when markets recover.

"After a good start to the year, with growth outside of China in January and February, our business started to be materially impacted by Covid-19 in March," said chief executive officer Mark Read.

"Our response has focused on four areas: the health of our people, serving our clients, helping to mitigate the impact of the virus on our communities and ensuring WPP is financially strong."

Read said close to 95% of WPP's 107,000 people were working from home, reportedly providing uninterrupted service to clients.

"We have also won $1bn of new business in the first quarter, including the global integrated Intel account, creative duties for Discover and the media accounts for Hasbro and Novo Nordisk.

"We have witnessed a decade's innovation in a few short weeks, with the way people meet, shop, work and learn increasingly reliant on technology.

"We are seeing clients rapidly shift emphasis and budget into digital media and direct-to-consumer channels and continue marketing technology investments.

"And, while many clients are significantly impacted by a reduction in consumer demand, other sectors such as packaged goods, technology and food retail brands have been more resilient."

Read said that, as in previous downturns, those who were "most prepared and most far-sighted" would be at an advantage afterwards.

"Despite the economic challenges that will, no doubt, be with us for some time, the way we have come together gives us real confidence in our future."

At 0803 BST, shares in WPP were up 1.73% at 600.6p.