WPP Slashes Dividend as Profits Plunge Amid Declining Client Spend

WPP, the UK-based global communications, advertising, public relations, and technology group, has halved its interim dividend after reporting a sharp drop in profits, driven by reduced client spending and a slowdown in new business activity.

Operating profit fell by 47.8% to £221 million in the six months to June. Revenue less pass-through costs declined 4.3% to £5.026 billion on a like-for-like basis. The company now expects a full-year decline of between 3% and 5% in revenue less pass-through costs, also on a like-for-like basis.

WPP, which warned investors in July of weakening sales, client losses, spending cutbacks, and a shrinking pipeline of new pitches, has launched a strategic review to address the downturn.

“It has been a challenging first half given pressures on client spending and a slower new business environment,” said outgoing CEO Mark Read.

“We have, however, made significant progress on the repositioning of WPP Media, simplifying its organisational model to increase effectiveness and reduce costs.

“Meanwhile, the acquisition of InfoSum, the launch of Open Intelligence, and the continued adoption of WPP Open all strengthen our data and technology capabilities.

“The board is declaring an interim dividend of 7.5p ahead of a review of the strategy and future capital allocation policy, which will be led by Cindy Rose, who succeeds me as CEO on 1 September.

“The priority is to drive sustainable growth supported by an appropriate level of financial flexibility while balancing returns to shareholders.

“WPP is a company with enormous strengths in creativity and media, technology and AI, talented people, deep client relationships, and unmatched global reach.

“Throughout my seven years as CEO, technological innovation has been a constant, and I believe that thanks to our investment in AI, we can look to the future with confidence.”

Across the business, WPP's Global Integrated Agencies saw a 4.5% like-for-like drop in revenue less pass-through costs, while WPP Media fell by 2.9%. Other integrated creative agencies declined by 5.8%.

Regional performance was also weak, with North America down 2.4%, the UK falling 6%, Western Continental Europe dropping 5.5%, and Rest of the World declining 5.4%. India remained flat at 0.1%, while China slumped by 16.6%.

The interim dividend has been cut to 7.5p, down from 15p. “The board recognises the importance of dividends to shareholders, and today's step balances that, creating room for our incoming CEO to review the group’s strategy and capital allocation policy while maintaining financial flexibility,” the company said.