WPP Chairman And CEO Address Shareholders; Turnaround Anticipated In Second Half

  • May 02, 2019 AEST
  • Team Kalkine
WPP Chairman And CEO Address Shareholders; Turnaround Anticipated In Second Half

WPP AUNZ Limited (ASX: WPP), is an Australian company specialising in communication and advertising services. It provides its clients advertising, communication, public relations, and marketing solutions. The four major segments of WPP include Public Relations & Public Affairs, Advertising and Media Investment Management, Data Investment Management and Specialist Communications.

On May 2nd, 2019, WPP announced its Annual General Meeting voting results. The resolutions of the vote were regarding the re-election of board members, Perf rights and STIP Perf Shares of Interim CEO & Exec Director under LTI, and the remuneration report. All the resolution items considered for vote received comfortably passed the vote.

The chairman and the CEO addressed the shareholders in the Annual general meeting, laying down the strategies along with the business outlook for 2019 and defining its resolutions for the year. The management of the company intends to make WPP into a creative transformation company. Further, the management plans to proactively respond to structural changes. They have made game changing investments with the aligned businesses- Essence and Lightspeed, acquired both in 2018, for better positioning and growth in the market.

Chairman Rob Currie admitted the disappointing recurring underperformance from few of the production and creative agencies with 60% of the 2018 downgrade and stated that the next 12 months would stabilise and boost those businesses.

The management discussed the structural changes and laid down the strategies to better their growth. Few challenges include the prominent role of traditional creative agencies, consultants competing for technology and talent, tech giants Facebook and google drawing talent and attention.

The efficiency in communications, commerce, experience and technology is the key strategy WPP follows.

Highlighted below are the various business outlook of WPP:

  • The underlying earnings per share would remain flat against the prior year.
  • The Q1 trading results show a positive sign, heading ahead of the internal forecast, though behind prior year results.
  • The market media expense in Q1 is expected to be down circa 7%.
  • The first half trading results are likely to be weaker when compared to the previous corresponding period.
  • Heavier weighing of earnings in the second half of the year would be driven by the turnaround of underperforming units and full year benefit of material contract wins.

The company also stated that they are focussing on the current gender imbalance. At the senior level, presently only 39% of the senior roles are taken care by women across all offices. By 2020, they aspire to reach the target of 50:50 in this regard. For the same, they have signed up to the Diversity Council of Australia and Diversity Works in New Zealand.

Earlier this year, in February, WPP presented its annual full year financial review for the year ending 2018. The net sales amounted to $857.3 million, down 1.4% as compared to $869.9 million reported in the prior corresponding period of 2017. EBIT of $121.0 million was recorded, down 12.8% as compared to Dec 2017 EBIT. The operating margin stood at 14.1% as against 15.9% in Dec 2017. EPS was down 14.5% from 9.8 cents in Dec 2017 to 8.4 cents in Dec 2018. The total full year dividend was recorded to be 6.3 cents.

As on 2 May 2019, the WPP stock closed the day’s trade at A$0.560, trading flat as compared to its previous close price.


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