WPP AUNZ posts $253.5 million loss in first half

WPP AUNZ has announced its financial results for the half year ending 30 June 2019, with it reporting a loss of $253.5 million after tax and minorities.

There were losses across key segments with net sales of $405.6 million, down 2.6 percent on 2018, and headline EBIT of $43.6 million, down 12.6 percent.

Its operating margin of 10.7 percent is down from 12 percent in 2018 and headline earnings per share of 2.7 cents is down 15.3 percent on the year before.

The interim dividend of 2.3 cents per share is in line with 2018 half year dividend, which was also 2.3 cents per share.

Commenting on the results, John Steedman, executive director and interim chief executive officer, said it experienced a mix performance across our portfolio of companies.

“Data investment management, public relations and specialist communications all achieved organic earnings growth in the first half, while the advertising and media segment faced headwinds due to global and local account losses, and a weak media spend market.”

He said it’s progressing its strategy to simplify the business, with the portfolio set to reduce by 20 businesses through agreements entered into in the first half of the year and post the half year end. This reduction will be through closure, merger of brands, and sales.

One recently announced was the proposed transaction to sell Kantar. Completion is expected to be in early 2020.

With its results, WPP AUNZ predicted overall Australian and New Zealand market’s media spend in 2019 to be flat and its current expectation is to deliver earnings per share decline of five percent-10 percent for the 2019 full year.

To this point, Steedman the earnings of the company are traditionally weighted towards the second half of the year so it still expects a strong result for the second half.

“Our forecast is based on an expected improvement in performance from the Large Format Production segment as operational efficiencies begin to deliver earnings upside; and incremental earnings from new business wins in the Advertising and Media segment achieved in the first half of the year. Our trading result for July was ahead of forecast and the prior year comparison. We are, however, conservative in our outlook given the heavy weighting of earnings in the second half.”

Helping to steer the ship in the second half will be Jens Monsees who is set to take the chief executive officer role on 1 October. Steedman says Monsees has a strong international reputation for building brands and leading change.

“Together with the leadership team, he will be charged with developing a strategic plan to accelerate our positioning for future growth and to capitalise further on the many opportunities available through our scale.”

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