WPP PR arm improves in Q3 amid 'robust' client demand

WPP reported an improved performance in its PR division in the third quarter of 2020, citing strong demand for comms services.

WPP PR arm improves in Q3 amid 'robust' client demand

Like-for-like revenue in WWP's PR division fell 2.9 per cent to £210m in Q3, an improvement on Q2, when it fell 7.5 per cent (the figures exclude 'pass through' costs).

The division – which includes Burson Cohn & Wolfe, Hill+Knowlton Strategies, Finsbury and Buchanan – continued to be the best performing across the group in Q3, WPP said in a trading update this morning.

"Client demand for strategic communications advice in light of the pandemic remained robust, with BCW recovering well," the company stated.

The overall revenue decline in the PR division in Q3 was 6.9 per cent.

For the first three quarters of the year, like-for-like revenue in the PR arm is down four per cent to £636m.

The marketing services giant reported an improved performance overall in the third quarter. The decline in like-for-like revenue narrowed from 9.5 per cent in Q2 to 7.6 per cent in Q3 – revenue excluding pass-through costs was £2.4bn in the third quarter.

Among its biggest markets, the like-for-like revenue decline was smallest in Germany (1.8 per cent), followed by the US (-5.5 per cent), UK (-6.5 per cent), India (-16.3 per cent) and Greater China (-16.7 per cent).

WPP said it continued its "good momentum" in new business wins, with $1.6bn of new business won in Q3, taking year-to-date wins to $5.6bn. Yesterday PRWeek reported that Walgreens Boots Alliance has extended its relationship with WPP as its global marketing and communications AOR.

WPP said today: "Progress in the third quarter on both the recovery in activity and cost management has been ahead of our expectations. We do, however, remain cautious on the speed of recovery as we track further waves of the pandemic and government responses.

"Assuming no widespread lockdowns in any of our major markets for the rest of the year, we expect full-year like-for-like revenue, less pass-through costs, to be within the current range of analysts' forecasts of -8.5 per cent to -10.7 per cent, and headline operating margin to be within the current range of analysts' forecasts of 11.4 per cent to 12.5 per cent."

WPP chief executive Mark Read said: "WPP continues to demonstrate its resilience in a challenging market. We have maintained our new business momentum as clients seek out our creativity and our skills in media, technology, data and ecommerce. This month, Uber joined a growing list of major assignment wins that includes Alibaba, Dell, HSBC, Intel, Unilever and Whirlpool, and we continue to lead the new business rankings. We have also renewed and expanded our relationship with Walgreens Boots Alliance to encompass its data- and technology-driven marketing strategy.

"Given the tightening of COVID restrictions around the world and uncertainty in the global economic outlook, we remain cautious about the pace of recovery. It is important that we maintain our strong financial position and we are on track to achieve cost savings towards the upper end of our £700m-£800m target."

He added: "Our people have done a superb job in serving our clients, largely working from home; but the events of 2020 have, of course, created new pressures for everyone. We have increased our investment in employee support services, with a particular focus on mental health and wellbeing, and this will be an ongoing priority for our leadership."

Analyst Steve Liechti at Numis said WPP's Q3 figures "look positive sequentially", as the 7.6 per cent like-for-like revenue decline is better than the forecast of -10 per cent.

He added: "Our forecast is unlikely to change materially, but bottom-end numbers should move upwards. Valuation is modest on any recovery scenario."

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