(Alliance News) - Advertising firm WPP PLC on Thursday posted a double-digit profit slump but said it has made "good progress" in its restructuring plan which it is now in its second year.
WPP shares were down 15% at 768.77 pence each in London early on Thursday morning, making them the worst performer in the FTSE 100.
From continuing operations, revenue for 2019 was up 1.4% to GBP13.23 billion from GBP13.05 billion, but pretax profit slumped 22% to GBP982 million from GBP1.26 billion.
The profit hit was largely due to it booking a GBP68.4 million hit from the revaluation of financial instruments, compared to a GBP169.4 million gain in 2018.
Billings meanwhile, slipped 0.3% to GBP53.06 billion GBP53.22 billion. Like-for-like billings were down 1.0% in 2019.
Revenue less pass-through costs came in 0.3% lower at GBP10.85 billion, from GBP10.88 billion.
It was fractionally below consensus which forecast WPP to post revenue, minus pass-through costs, of GBP12.86 billion.
WPP said: "We have made good progress with our three year strategy during 2019, creating a simpler business, making significant investments for future growth and strengthening our balance sheet. Our financial performance in the second half of the year showed an encouraging improvement over the first half and gives us confidence of further improvement heading into 2020, as we make progress towards our 2021 goals."
The company held its dividend at 60.0 pence per share.
M&A activity has been central to a large portion of the chopping and changing at the firm. In its interims posted in August 2019, WPP said it completed 44 disposals in 15 months, "positioning it for future growth".
After that, in December, it completed its disposal of 60% of consumer research house Kantar to investment firm Bain Capital Private Equity, a deal agreed in July. WPP said it expects to receive USD3.1 billion in cash after transaction costs and will continue to own 40% stake in Kantar.
Chief Executive Mark Read said on Thursday: "2019 was the foundational year for the new WPP strategy. We said that we would make progress in the journey to return WPP to growth, simplifying our business and reducing our debt, and we have delivered against each of these goals - having met our guidance for 2019, achieved our restructuring targets and completed the sale of a majority stake in Kantar."
Read hailed some its contract wins during the year, which included clients like Cadbury owner Mondelez International Inc, French insurer AXA SA, online marketplace eBay Inc, toy maker Hasbro Inc and Facebook Inc's photo sharing site Instagram.
Read added: "Perhaps most importantly, our clients and our people tell us that WPP has a clear new sense of purpose and is successfully instilling a culture of creativity, collaboration and openness. As we enter the second year of our three-year turnaround plan, our ability to attract and retain the best people is key to long-term growth."
The company unveiled extensive plans for a sleeker business in December 2018, and in the process, cutting around 3,500 jobs in areas of duplication, and hiring a further 1,000 to boost its technology and creative divisions, particularly in New York.
It said at the time that it expects to generate annualised cost savings of GBP275 million by the end of 2021, half of which will be re-invested in the company, for a one-time restructuring cost of GBP300 million over the three years.
For 2020, the company expects revenue less pass-through costs to be flat year-on-year, although WPP said this guidance was made prior to any impact from the coronavirus outbreak.
"I am optimistic about the future of our industry and WPP's position within it, although there is still much more work to do," Read said.
By Eric Cunha; ericcunha@alliancenews.com
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