29th Apr 2020 09:26
(Alliance News) - WPP PLC on Wednesday said revenue declined as expected in the first quarter, taking a substantial hit from Covid-19 in March.
Shares in WPP were up 3.8% at 612.60 pence in London in morning trading.
The FTSE 100 advertising and marketing firm reported a 19% drop in revenue for the three months ended March 31 to GBP2.92 billion from GBP3.59 billion, a like-for-like decline of 3.6%. This like-for-like figure excludes acquisition and disposal effects. WPP said Covid-19's negative impact on the first quarter was "as expected".
The company has taken steps to manage its cash flow and profitability, including suspending its final 2019 dividend and its share buyback programme, as well as reducing costs and capital expenditure.
It is also putting further measures in place, including a "voluntary salary sacrifice" across more than 3,000 senior roles, as well as "part-time working and some permanent headcount reductions".
Chief Executive Mark Read said: "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."
Read noted that WPP has "won USD1 billion 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. As in previous downturns, those who are most prepared and most far-sighted will be at an advantage when we come through the current situation," said Read.
At the end of March, WPP's cash stood at GBP1.7 billion and its total liquidity was GBP4.4 billion. Net debt was GBP2.8 billion, declining from GBP4.6 billion the prior year.
As previously announced, WPP has withdrawn its 2020 guidance and expects to take an even more substantial hit from Covid-19 in the short term, though "the depth or duration of the impact" is not known.
By Anna Farley; [email protected]
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