The latest update from advertising agency WPP suggests it was more a case of growth disrupted and delayed than entirely deflated by coronavirus.
“2020 was supposed to be the year that the turnaround strategy under CEO Mark Read moved from consolidation, or making sure things didn’t get any worse after the acrimonious departure of CEO Martin Sorrell, to progressing the business,” according to Russ Mould from AJ Bell.
“A global pandemic put paid to such lofty plans. Now an investor day signals how Read and his finance chief, the well-regarded John Rogers who was poached from Sainsbury’s last year, intend to fully revamp WPP.
“The company is adapting to a more digitally-focused future, noting the acceleration in this area driven by Covid. It is also simplifying the corporate structure by merging brands, creating closer links between individual businesses within the group, investing in tech and making operations more streamlined. Cost savings will be funnelled into acquisitions, which will play a role in, for example, bolstering its footprint in e-commerce.
“One question is whether WPP’s mixed legacy, which includes an entrenched position in the market, offering influence and reach, makes up for the more analogue parts of the group or if it could be left behind by the more agile pure digital plays, like Sorrell’s own latest venture S4 Capital.
“In the context of a year of dividend disappointment the increase in the dividend announced today and a renewed share buyback programme, plus a commitment to increase capital returns to shareholders in the longer term, will be greeted like a glass of water in a desert.”