First Quarter Trading Update

29 Apr 2020

Good performance to February; March impact of COVID-19 as expected; strong liquidity position supported by substantial actions on cost and cash flow

Note: all numbers relate to continuing operations unless otherwise stated

  • Q1 revenue -4.9%; LFL1 revenue -3.8%
  • Q1 LFL revenue less pass-through costs -3.3%, with impact of COVID-19 felt more strongly in March, at -7.9%, as expected
  • Top five markets Q1 LFL revenue less pass-through costs: US -1.9% (March -3.7%); UK -4.2% (March -9.8%); Germany -4.3% (March -14.9%); Greater China -21.3% (March -29.9%); India 6.1% (March -1.1%)
  • China: offices back to around 90% occupancy, rapid recovery in economic activity
  • Encouraging net new business performance: $1 billion won in first quarter
  • Strong liquidity and balance sheet: average net debt £2.1 billion, down £2.1 billion year-on-year, with £4.4 billion of cash and undrawn facilities
  • Substantial actions already taken to manage cash flow and profitability include suspension of the 2019 final dividend and share buyback programme, reductions in costs and capital expenditure, and tight controls on working capital
  • Further measures on costs now being implemented: voluntary salary sacrifice from over 3,000 senior roles, part-time working and some permanent headcount reductions
  • Plans in place to flex costs against a range of economic scenarios to ensure cash flow and profit are managed and the business can respond quickly when markets recover

Mark Read, Chief Executive Officer of WPP, 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. 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.

“Close to 95% of our 107,000 people are working from home, providing uninterrupted service to clients, helping them to communicate their own actions, sustain their brands and develop new ways to market their products. We have also won $1 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.

“At a time of great uncertainty, I am very proud of how our people and clients have responded. 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.”

First Quarter Trading Update 2020 press release PDF 276.4KB

  1. Like-for-like growth at constant currency exchange rates and excluding the effects of acquisitions and disposals

 

For further information:

Investors and analysts
Peregrine Riviere } +44 7909 907193
Fran Butera (US) } +1 914 484 1198

Media
Chris Wade } +44 20 7282 4600
Kevin McCormack (US) } +1 212 632 2239
Juliana Yeh (APAC) } +852 2280 3790

Richard Oldworth, +44 20 7466 5000
Buchanan Communications +44 7710 130 634

wpp.com/investors