WPP has announced a wide range of cost-cutting and cash-saving measures to protect profitability, where possible, and conserve jobs as it copes with the severe financial fallout from the Covid-19 crisis.
Immediate actions include freezing hires, reviewing freelance spending, postponing planned salary increases for 2020 and stopping discretionary costs. The latter includes cutting travel expenses and the costs of entering awards shows – something that is likely to include the Cannes Lions International Festival of Creativity.
In addition, WPP executive committee and board members have agreed to a 20% cut to their salaries or fees for at least three months. The company said it will be looking at further measures in the coming weeks and months, but expects the moves outlined will save between £700m and £800m in 2020. WPP has also identified more than £100m in property and IT capital spending that it now plans to save.
Given the new financial pressures, WPP's board has also decided to immediately suspend the £950m share buyback programme, which had been funded by proceeds from the Kantar sale. Since December 2019, £330m of the programme has already been completed. The board has also suspended its planned 2019 final dividend to shareholders of 37.3p per share, which was going to be proposed at the annual general meeting in June. Together, these two measures will save approximately £1.1bn of cash.
Since the full extent of Covid-19's impact is still uncertain, WPP has joined Publicis Groupe and Interpublic in withdrawing its financial guidance for the year. The company's first-quarter trading update will be published on 29 April.
"The actions we have taken in the last 18 months to streamline and simplify WPP, together with raising £3.2bn in asset disposals, have put WPP in a strong financial position," WPP chief executive Mark Read said in a statement. "It is clear that the companies in the strongest financial position will be best-placed to protect their people, serve their clients and benefit their shareholders during a period of great uncertainty, which is why we are taking the steps we are outlining today."
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