The Lemon Fool

Mark Read, Chief Executive Officer, WPP:

"We continue to make good progress in implementing our three-year strategy to return WPP to sustainable growth.

"As anticipated, our first quarter trading update reflects the impact of certain significant client losses in 2018, in particular in the United States. Although we face a challenging year, especially in the first half, I am encouraged by how well our people, agencies and clients are responding to our new strategic direction. Our expectations for the full year are unchanged.

"Our newly formed agencies are showing initial signs of success in new business pitches. The most recent merger, Wunderman Thompson, has followed VMLY&R's strong start by winning Duracell's international creative account. BCW has brought in nearly $70 million in new business in its first year.

"In March, five of our companies were recognised in Gartner's influential Magic Quadrant study of the world's leading and most forward-looking agencies, while WPP topped the WARC Effectiveness and Media 100 lists. This month, the Effie Index ranked us as the world's most effective communications company for the eighth successive year, demonstrating our enduring ability to deliver tangible business results for our clients.

"LinkedIn named WPP as one of the top 50 companies people want to work for in the United States, and we continue to attract top talent to the business. A key priority in 2019 is to invest further in senior creative talent in the United States.

n Reported revenue up 0.9%

n Like-for-like revenue less pass-through costs -2.8%, reflecting anticipated headwinds following client assignment losses in 2018

n Decrease in average net debt from £4.875 billion in the first quarter of 2018 to £4.163 billion in the first quarter of 2019 (at 2019 exchange rates). Improvement of £712 million follows disposal of non-core associates and subsidiaries

n Continued progress in implementing three-year turnaround plan

n Financial guidance for 2019 unchanged

idpickering wrote:The Trading Statement has gone down well, with the sp up over 2% on market opening. I intend topping up next month.

Ian.

kempiejon wrote:

idpickering wrote:The Trading Statement has gone down well, with the sp up over 2% on market opening. I intend topping up next month.

Ian.

Let's hope it stops going up then...

kempiejon wrote:Cheers Ian, I bought into WPP a couple of years back for their great looking history of increases, double digit growth over 5, 10 and 15 yrs. https://www.dividenddata.co.uk/dividend ... y?epic=WPP. Seems I could have bought a fair bit more income for my buck today as the sp has declined since my buy and since I put my money up the dividend policy has changed and is less progressive, flat last year reducing debt but at least a stated focus on dividends over buybacks but forecast cover is reducing and no increases in income. In fact webfg gives a reduction in 2021 if such things can be trusted. https://www.sharecast.com/equity/WPP

Arborbridge wrote:WPP is in effect a recovery or turnaround situation - though fortunately not after a fully fledged collapse. That is why the yield is high, of course, and we will just have to be patient - meaning two or three years before the clouds lift if they are going to. By then we will know which direction things are going in.

Meanwhile, we sit and take the dividends and wait for better days. From my POV, it was just bad timing that I bought in a couple of weeks before Sorrell left - now the only question is whether the management is good enough to justify my faith in their future so that I can topup in peace.

High yield in investing is fundamentally a high risk enterprise and that goes with the territory.


Arb.

n Bain Capital Private Equity's ("Bain Capital") acquisition of 60% of Kantar creates a strong partnership with WPP to accelerate the development of Kantar

n Further simplifies and repositions WPP for growth, whilst unlocking significant value for shareholders

n Kantar valued at c.$4.0bn (c.£3.2bn1) in the proposed transaction, equivalent to a multiple of 8.2x 2018 Kantar headline EBITDA2

n Proceeds to WPP on completion after tax and continuing investment in Kantar expected to be c.$3.1bn (c.£2.5bn)

n Potential value upside for WPP shareholders from 40% equity stake in Kantar

n WPP to retain c.60% of net proceeds to reduce debt to the low end of the target leverage range of 1.5 - 1.75x average net debt/EBITDA3 for 2020

n Balance of proceeds, c.$1.2bn (c.£1.0bn), to be returned to shareholders

n Impact of proposed transaction and use of proceeds expected to be marginally dilutive to headline EPS in 2021

n Completion and associated proceeds relating to no less than 86% of Kantar expected in early 2020, subject to approval by WPP shareholders and other customary regulatory and legal approvals

Gadgeisbackagain wrote:Sounds like the party is over and the cake is being handed out to the last hangers-on to me.

Further to the statement in its first quarter trading update on 26 April 2019 that it would review the appropriateness of its existing business sector reporting, WPP is today announcing the outcome of this review.

A key element of our strategy is to align our technology capabilities more closely with our creative expertise, and to simplify WPP through the creation of fewer, stronger, integrated agencies. As a result, a number of businesses currently reported within Public Relations & Public Affairs, and Brand Consulting, Health & Wellness and Specialist Communications, have been merged with entities within Advertising & Media Investment Management ("AMIM"). These include Wunderman, VML, Ogilvy PR and OgilvyOne. Additionally, the US healthcare companies have been re-aligned with strong agency partners within AMIM, and Burson Marsteller and Cohn & Wolfe have been merged to form Burson Cohn & Wolfe.

As a consequence of these moves, which reflect changes in the way we manage the business and report internally, we will report under the following sectors as from the 2019 interim results:

WPP will announce its Third Quarter Trading Statement for the nine months ended 30 September 2019 on Friday, 25 October 2019.

•Improvement in Q3 in major markets and sectors
•Global Integrated Agencies back to growth in third quarter
•Significant improvement in North America and China
•Net new business of $3.9 billion in first nine months

Mark Read, Chief Executive Officer of WPP, said:

“WPP’s performance in the third quarter is another important step in the strategy we outlined in December 2018 to return the Company to sustainable growth in line with our peers in 2021.

“Our growth in Q3 is encouraging but we are focused on delivering these longer-term goals and know there will be twists and turns along the way. Our guidance for 2019 remains unchanged.

“It continues to be a successful year for new business, with major wins in the quarter including Mondelez and eBay, but just as importantly we are growing and retaining longstanding clients, such as the US Marine Corps and Centrica, who value the depth of our understanding and the longevity of the relationship.

“Yesterday, WPP shareholders voted to approve the Kantar transaction, which will further simplify our business and significantly strengthen our balance sheet, while creating a new partnership for Kantar’s future growth and development.

“In the last 12 months, WPP has taken decisive action and made substantial progress on many fronts: we have fewer, stronger agency brands; new leadership in many of our companies; enhanced central teams supporting our companies; and a renewed commitment to creativity, powered by technology. We have cemented our position as the largest partner to the world’s leading technology firms and, most importantly, the work we do continues to be highly valued by our clients as we adapt to their changing needs in a dynamic marketplace.”