(Alliance News) - Advertising and marketing firm WPP PLC on Thursday said its performance was resilient in 2020, even as revenue fell and it swung to loss.
Revenue for 2020 fell 9.3% to GBP12.00 billion, with revenue less pass-through costs down 10% at GBP9.76 billion. Reported billings were GBP46.9 billion, down 12% year-on-year, and down 9.6% like-for-like.
WPP noted that full-year like-for-like revenue less pass-through costs fell 8.2%, with a sequential recovery from initial lockdowns as the second quarter saw a 15% fall, the third quarter a 7.6% decline and the fourth quarter a 6.5% slip.
"While revenue was significantly impacted as clients reduced spending, our performance exceeded our own expectations and those of the market throughout the year. There is no doubt that the actions we took during the previous two years to transform and simplify the business and reduce debt - to a 16-year low at the end of 2020 - played a crucial role in the strength of our response," said Chief Executive Mark Read.
The firm swung to a pretax loss of GBP2.79 billion from a GBP1.21 billion profit in 2019 due to impairments of GBP3.1 billion and GBP313 million of restructuring and transformation costs. The goodwill impairments relate to historical acquisitions whose carrying values have been reassessed in light of the impact of Covid-19, WPP explained.
Restructuring and transformation costs mainly comprise severance and property-related costs arising from the continuing structural review of parts of the firm's operations.
WPP proposed a final dividend of 14.0p for 2020, bringing the total for the year to 24p versus 22.7p in 2019. The firm added that it is recommencing its share buyback, funded by the proceeds of the Kantar transaction, immediately, planning to purchase up to GBP300 million by June 18.
WPP sold a 60% stake in brand and marketing research firm Kantar to private equity firm Bain Capital in 2019 for USD3.1 billion.
The purpose of the buyback programme is to reduce the share capital of WPP, it said.
For 2021, WPP reiterated its guidance of organic growth in mid-single-digits percent and a headline operating margin around 13.5% to 14.0%.
For the medium-term, the company is guiding for a recovery to 2019 revenue less pass-through costs levels by 2022. WPP also said it expects 3% to 4% annual growth in revenue less pass-through costs from 2023.
"While uncertainties remain around the impact of the vaccine roll-out and economic growth, we continue to expect 2021 to be a year of solid recovery," Read said.
WPP shares were trading 0.8% higher in London on Thursday at 919.20 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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