WPP PR arm flat in Q4 as performance improves

WPP saw an improved performance in its PR business in the fourth quarter of 2019, with revenue in the PR arm almost flat in Q4.

Like-for-like PR revenue fell 0.1 per cent in Q4, leaving a year-on-year decline of one per cent to £898m (excluding pass-through costs).

That compares to a like-for-like decline of 0.9 per cent in Q3 in the PR division, which includes Burson Cohn & Wolfe, Hill+Knowlton Strategies, Finsbury and others. Revenue growth in the second half was -0.4 per cent, against -1.5 per cent in H1, on a like-for-like basis.

Overall revenue growth, including acquisitions and disposals and stripping out currency fluctuations, was -0.1 per cent in the PR division in 2019.

WPP highlighted H+K and the specialist PR businesses Finsbury, Glover Park, Hering Schuppener, Buchanan and Clarion as "performing strongly".

Operating profit in the PR division rose from £139m to £141m, although operating margin declined slightly, from 15.8 per cent to 15.7 per cent. The PR arm does not include Ogilvy, which listed among the Global Interated Agencies arm.

Across the business, the marcomms giant reported a 21.9 per cent fall in pre-tax profit in 2019 to £982m. WPP cited a one-off “significant” gain in the first half of 2018 and £238m impact from a charge on the revaluation of financial instruments versus a credit in 2018.

Revenue excluding pass-through costs fell 0.3 per cent to £10.8bn, and the group said it expects this to be flat in 2020, along with flat operating profit margin.

Like-for-like revenue in the fourth quarter grew 0.1 per cent, versus +1.9 per cent in Q3. WPP said there was an "improving" performance in the UK and Western Continental Europe, although this was "more than offset by North America and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, which were slower".

WPP CEO Mark Read said: "2019 was the foundational year for the new WPP strategy, and thanks to the hard work of all our colleagues we have made substantial progress in a short period of time.

"We said that we would make progress in the journey to return WPP to growth, simplifying our business and reducing our debt, and we have delivered against each of these goals - having met our guidance for 2019, achieved our restructuring targets and completed the sale of a majority stake in Kantar. The second half of 2019 was stronger than the first, with performance improving globally and in the United States, our largest market.

"Our new offer of creativity powered by technology has resonated with clients, as we've seen in good retention rates and important wins. New creative assignments include Instagram and Mondelez, and AXA, eBay and Hasbro were among the media wins.

"Perhaps most importantly, our clients and our people tell us that WPP has a clear new sense of purpose and is successfully instilling a culture of creativity, collaboration and openness. As we enter the second year of our three-year turnaround plan, our ability to attract and retain the best people is key to long-term growth.

"I am optimistic about the future of our industry and WPP's position within it, although there is still much more work to do. The marketing landscape has never been more dynamic and complex: clients need our help and expertise more than ever. With our market-leading scale and global footprint, allied to the creativity of our agencies and our technology leadership, we are confident of further progress against our 2021 targets."

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