WPP to accelerate investment in India, China and South America in 2021

WPP has put up a resilient show, witnessing further recovery in Q4 of 2020. Its net debt at December 31, 2020 was reported at £0.7 billion, which was better than expected and down £0.8 billion year-on-year, reflecting continued strong working capital and cash management.

The Full Year continuing operations reported revenue was -9.3%, while LFL revenue was -7.3%, with Full Year LFL revenue less pass-through costs at -8.2%. WPP saw sequential recovery since the initial lockdowns: Q2 -15.1%, Q3 -7.6%, Q4 -6.5%.

The Q4 LFL revenue less pass-through costs by major market are: US -6.2%, UK -7.4%, Germany -0.8%, Greater China -12.1%, India -8.9%. Full Year headline operating margin was at 12.9%, down 1.5pt on prior year as cost savings of over £800 million offset the majority of the revenue decline. Reported loss before tax was impacted by £3.1 billion of impairments (£2.8 billion goodwill, £0.3 billion investment and other write-downs).

Commenting on the performance, Mark Read, Chief Executive Officer, WPP, noted that while 2020 was a tough year for everyone, WPP’s performance has been remarkably resilient. “At the height of the pandemic, we saw five years’ worth of innovation in five weeks, with a dramatic shift to digital media and e-commerce as people’s lives went online – trends on which we based our vision for WPP,” he added.

Sounding positive about the year ahead, Read further said, “The demand from clients for simple, integrated solutions that combine outstanding creativity with sophisticated data and technology capability is only set to grow and, 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.”

Furthermore, leveraging WPP’s existing global strength the group plans to accelerate its investment in high growth potential markets, such as China, India and South America; and in its innovative digital platforms, such as Xaxis, the programmatic business, and Finecast, WPP’s market-leading addressable TV platform. WPP will supplement organic growth with targeted acquisitions, scalable across the group, which bring in additional talent, capability and technology. Already in 2021, WPP has acquired growth businesses in digital experience and mobile commerce, which exactly align with its strategy.