WPP H1 2020 interim results: Revenue stands at £5.6 billion, down 12.3% from 2019

WPP has released its interim financial results for 2020, reporting revenue of £5.6 billion in its first half, down from £6.4 billion (12.3%) in the first half of 2019. Revenue less pass-through costs were £4.7 billion, down from £5.2 billion in the first half of 2019.

The company reported that its H1 headline operating margin stands at 8.2%, down 3.7pt on the prior year as cost savings offset the majority of revenue decline.

The company's communique also said that it registered £296 million in cost savings in H1 and is on track to deliver towards the upper end of the £700-800 million target. "Around 25% of these savings expected to be permanent when returning to 2019 levels of revenue less pass-through costs," it read.

The company also reported impairments of £2.7 billion (including £2.5 billion of goodwill impairments and £0.2 billion of investment and other write-downs) in the first half. "The goodwill impairments relate to historical acquisitions whose carrying values have been reassessed in light of the impact of COVID-19. The impairments are driven by a combination of higher discount rates used to value future cash flows, a lower profit base in 2020 and lower industry growth rates," it said. 

Mark Read, Chief Executive Officer, WPP commented: "“After two months in which our strategic progress could be measured by growth outside Greater China, the second quarter saw an inevitable downturn, with like-for-like revenue less pass-through costs declining by 15%, albeit better than our expectations. Assuming there is no second wave nor major lockdowns, the second quarter is expected to be the toughest period of the year, although we remain cautious on the speed of recovery. 

“Our strategic transformation remains on track but as COVID-19 accelerates the change in our sector, we are accelerating our plans. We continue to attract new talent, invest in technology and ecommerce, and train our people in the skills they need for the future, with more than 20,000 receiving accreditations from Adobe, Amazon, Facebook, Google and Salesforce this year.

“We are working with our clients to help them get back to business, adapt their marketing strategies at speed and reshape their operations for a new world. Brands are seeing increases in online sales of 100% and more, and we are supporting eight of our top ten clients on ecommerce strategies. Our new business record is industry-leading, at $4 billion in the first half, including wins from Intel, HSBC and Unilever, and our pipeline remains strong.

“With £4.7 billion of liquidity thanks to the Kantar transaction, and as we deliver against our cost savings targets, our financial position remains strong. As a result, we are able to return to paying our dividend, with an interim dividend of 10p for 2020.

“I would like to thank our people around the world, the vast majority of whom have been working from home and have shown great creativity, agility and collective spirit to support our clients in challenging times.”