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WPP reports a mixed first half of 2024, marked by the sale of its majority stake in financial PR firm FGS Global to KKR, yielding $763 million after tax. However, the company’s organic growth struggled, with an overall decline of 3.6%, exacerbated by a sharp 24.2% drop in revenue in China during the second quarter.
Despite these challenges, WPP recorded an improved profit before tax of $427 million, up from $258 million, attributed to lower costs on a slightly decreased revenue of $7.1 billion compared to the previous year. GroupM, the media arm, saw modest growth of 1.9% in the first half, while the global integrated agencies division experienced a 2.8% decline. Notably, Ogilvy and the production unit Hogarth performed well, while VML, which now includes most of the former creative agencies, continued to be impacted by the loss of Pfizer’s business. AKQA, now incorporating Grey, was affected by delays in client spending.
In the second quarter, revenue less pass-through costs fell by 0.5%, with North America up 2.0%, Western Continental Europe slightly increasing by 0.3%, and the UK down by 5.3%. The rest of the world saw a 2.2% decline, with growth in India at 9.1% offset by China’s 24.2% downturn. WPP’s operations in China have been marred by scandals involving executive dismissals, suspensions, and even arrests. The company is now forecasting flat growth (-0.1%) for the year.
CEO Mark Read remained optimistic, highlighting the company’s strategic advancements, including continued investment in AI, the creation of VML and Burson (consumer PR), and the simplification of GroupM. He emphasized the company’s strengthened client offerings and improved efficiency.
Read acknowledged the pressures in China and project-related businesses, coupled with a challenging macroeconomic environment, which led to a tempered full-year outlook. He noted the successful sale of FGS Global, which allows WPP to focus on its core creative transformation while bolstering its financial position.
WPP may benefit from streamlining operations, particularly with the still-challenging VML, which houses the remnants of Y&R, JWT, and Wunderman, as Ogilvy alone could potentially handle those responsibilities. GroupM is undergoing restructuring under new leadership, and the integration of Grey into AKQA, a top-tier digital content business rather than a traditional ad agency, remains a curious move.
Read’s strategy, which contrasts sharply with the aggressive acquisition approach of WPP’s founder, Sir Martin Sorrell, has seen the company scale back, retaining only a minority stake in the research arm Kantar and reducing its financial operations with the sale of FGS, though it still holds Buchanan under PR giant Burson. With a new chairman, Philip Jansen from BT, on the horizon, questions arise about whether these changes are happening swiftly enough to position WPP for future success.