WPP PLC said like-for-like net revenue decreased 8.2% in 2020 and fell 6.5% in the fourth quarter, compared with the same period a year earlier, as the coronavirus pandemic continued to disrupt business for major marketers.
But the advertising holding company characterized its performance as resilient, citing shrinking quarterly declines since the start of lockdowns around the world and growth in areas such as e-commerce
Like-for-like net revenue, a measure often referred to as organic revenue that strips out the effects of factors such as pass-through costs and acquisitions, decreased 15.1% in the second quarter of last year and 7.6% in the third quarter.
“We certainly have made a lot of changes to the business in the last year and that’s what we do when times are tough,” WPP Chief Executive Mark Read said in an interview. “We’ll see the benefits in 2021 as the economy recovers and clients restart their spend again.”
The ad holding company, which owns creative agency group VMLY&R, media buying network GroupM and advertising group Ogilvy, reported impairment charges of £3.1 billion ($4.3 billion) including £2.8 billion of goodwill impairments.
Mr. Read said the bulk of the charge is related to the company’s acquisition of Y&R 20 years ago. WPP in 2018 decided to merge Y&R with its digital agency VML as part of its efforts to deal with digital disruption in advertising and marketing.
The company swung to a pretax loss of £2.79 billion in 2020 from a profit of £1.21 billion in 2019.
WPP is currently focused on building its commerce and technology capabilities, demand for which saw a significant uptick during the pandemic, the company said. GroupM saw a 40% increase in media activity meant to drive people to e-commerce, said Mr. Read.
GroupM organic revenue was down 4.1% in the fourth quarter, similar to the third quarter, the company said.
Public relations services are typically hit hardest during downturns, but the sector was one of WPP’s strongest performers in 2020. The company’s organic revenue in PR decreased 4% in the fourth quarter, the company said.
Companies are realizing the importance of communication as they navigate a challenging time, said Mr. Read.
In the fourth quarter, organic revenue across WPP was down 6.4% in the U.S., 7.4% in the U.K., 0.8% in Germany, 8.9% in India and 12.1% in Greater China.
The company’s results in China in the past 18 months have been disappointing, said Mr. Read. WPP will likely invest in e-commerce and technology services in the region, where WPP is over-indexed on multinational clients and traditional media, he said.
“The technology footprint there is totally diverged from the rest of the world,” he said during an earnings call. “It does merit its own approach. That’s something that given our scale in the market we should be in a good position to take advantage of.”
WPP reduced its head count to just under 100,000 employees over the course of the year, from 106,478 in 2019, but said it will again increase its head count as it returns to growth this year.
The company last year generated £810 million in savings, slightly more than indicated in its previous guidance.
The company also plans to supplement organic growth this year with acquisitions that add up to around £400 million.
Write to Alexandra Bruell at [email protected]
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