FILE PHOTO: The corporate logo of WPP is seen in this picture from 2018, obtained July 12, 2019. WPP/Handout via REUTERS
LONDON (Reuters) – WPP (WPP.L), the world’s biggest advertising company, said it was pulling its dividend and share buyback, and withdrawing its guidance for 2020 after the coronavirus outbreak forced an increasing number of clients to cancel work.
The group, which has cut debt and raised cash as part of a three-year turnaround plan, said it was producing health campaigns for governments and clients around the world including in Britain where it launched an information service on WhatsApp.
But other clients are pulling campaigns and with no visibility on how long the downturn will last WPP has also launched a cost cutting drive, identifying up to 800 million pounds that can be saved in 2020.
The owner of the Ogilvy, Grey and Finsbury agencies has frozen new hires, reviewed freelance expenditure, stopped discretionary costs such travel and postponed salary increases.
Members of the executive committee and board have taken a 20% salary cut for an initial period of three months.
“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,” Chief Executive Mark Read said.
At the end of 2019, WPP had cash of 3 billion pounds ($3.7 billion) and total liquidity, including undrawn credit facilities, of 4.8 billion pounds.
WPP, with 107,000 staff, competes with U.S.-groups Omnicom (OMC.N) and IPG (IPG.N), and France’s Publicis. Already IPG and Publicis have pulled their outlooks for 2020.