The good news for WPP as it reports its half year 2024 figures is that it’s banking £604m after tax from the sale of its majority stake in financial PR company FGS Global to KKR. The bad news is organic growth (or lack of it) in the rest of the business, down 3.6% after what looks a car crash in China (down 24.2% in Q2.)
WPP did manage an improved profit before tax of £338mn from against £204mn, reflecting lower costs, on revenue of £5.6bn, down slightly on 2023. Media operation GroupM inched ahead 1.9% in H1 while what it calls global integrated agencies fell back 2.8%. Ogilvy and production business Hogarth were the standouts, VML (which now contains most of the former creative agencies) is still being impacted by the loss of Pfizer business according to WPP, AKQA (which now contains Grey) by client spending delays.
Q2 revenue less pass-through costs was down -0.5% with North America up 2.0%, Western Continental Europe +0.3% (but the UK down 5.3%) and the remaining world down 2.2%, with growth in India of 9.1% offset by China’s -24.2%. WPP in China has been hit by a succession of scandals with certain executives fired, suspended and even even arrested. WPP as a whole is forecasting flat or no growth (-0.1%) for the year.
CEO Mark Read, as ever, struck and upbeat note saying: “At our Capital Markets Day earlier this year we set out our strategy to build on and improve the competitiveness of WPP’s offer. I am very pleased with the progress we have made in the past six months against each of our strategic objectives, particularly our continued investment in AI, the creation of VML and Burson (consumer PR), and the simplification of GroupM. We are strengthening our offer for clients while building a more efficient company.
“Our second quarter performance delivered sequential improvement in net sales with continued growth in GroupM, Ogilvy and Hogarth and sequential improvement at Burson, VML and our Specialist Agencies. Importantly, we also saw North America return to growth in the second quarter. That said, we have seen pressure in China and in our project-related businesses which, together with an uncertain macro environment, has led us to moderate our expectations for the full-year.
“The sale of our stake in FGS Global is an excellent outcome less than four years after its creation from three separate businesses within WPP. It will allow us to focus and invest in our core creative transformation offer while significantly strengthening our financial position.”
It’s pretty obvious that WPP would make more money without the still-lumbering VML (containing the remnants of Y&R, JWT and Wunderman.) Ogilvy can do all those things. GroupM is undergoing surgery with a new boss in Brian Lesser while the absorption of Grey by AKQA, which isn’t an ad agency at all but a world class digital content business, looks ever more weird.
The best Read can hope for is to turn over about the same amount of money with a markedly lower cost base, including a further culling of highly-paid people (headcount was down 3,000 in H1.). Plus some kind of resolution in China although that’s now hardly in the company’s hands. Then, maybe, the company’s big investment in AI may ride to the rescue, although everyone else is doing it too.
Under Read, in marked contrast to highly acquisitive founder Sir Martin Sorrell, WPP has retrenched with now only a minority stake in research arm Kantar and much-reduced financial work with the sale of FGS although it still has Buchanan as part of PR giant Burson. With a new chairman Philip Jansen from BT in the wings, the question is, is this process happening quickly enough?
This is an amended version of an earlier story.
