WPP has reported a year-on-year revenue drop of 1 percent in the first half, comparing like-for-like (LFL) and once pass-through costs are removed. The global marcoms group has also sold its majority stake in comms specialist FGS Global to investor KKR, previously the minority shareholder.WPP's first half revenue of £7.23bn was almost flat as reported (+0.1%) but the ad group has always included what it says is a more representative figure, removing revenue which goes straight 'through' the business to suppliers - without this the revenue figure was down 3.6% or down 1% like-for-like. Operating profit was up 38% to £423m.
By region, revenue less pass-through costs and LFL was up 2.0% in North America and flat in Continental Europe but down 5.3% in the UK and down 2.2% in the Rest of the World. Growth in India (9.1%) was offset by a steep fall in China (-24.2%).
CEO Mark Read (pictured) says he is '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, and the simplification of GroupM. We are strengthening our offer for clients while building a more efficient company'. On the down side, he notes '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 company also announced this week that it had agreed to sell its majority stake in strategic communications and advisory firm FGS Global to investment firm KKR, in a deal valuing the business at $1.7bn and generating total cash proceeds to WPP of c.$767m after tax. KKR had made a minority investment in the Firm in July 2023 - prior to this week's deal its stake stood at 28%. WPP created a firm called Finsbury Glover Hering in 2021 by combining three of its group companies - Finsbury, The Glover Park Group and Hering Schuppener - and then merged it with Sard Verbinnen later that year to create FGS.
FGS employs around 1,400 people and serves more than 1,600 clients. The company is headquartered in New York and in 2023 generated $465m of net sales for $90m of headline EBITDA. The transaction is expected to close before the end of 2024, subject to regulatory approvals and other customary closing conditions.
Read comments: 'The sale of our stake in FGS Global is an excellent outcome less than four years after its creation... It will allow us to focus and invest in our core creative transformation offer while significantly strengthening our financial position'.
Alexander Geiser, Global CEO of FGS, adds, 'Over the past four years, we have built one of the world's leading strategic communications and advisory businesses from three independent consultancies and the addition of Sard Verbinnen. I would like to thank WPP for their help and long-standing collaboration in growing our firm. We are thrilled by the continued support of KKR, who also share our vision and strategy to be the leading advisor helping clients navigate the increasingly complex stakeholder economy. KKR's exceptional investment track record, extensive experience and global resources will be invaluable as we further grow our integrated solutions globally as a standalone firm'.
Group home page: www.wpp.com .
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
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