WPP eyes AI-driven growth after missing estimates
WPP has delivered a mixed set of full-year results today. The group reported an unexpected revenue decline despite a slight rise in operating profit.
Revenue less pass-through costs dipped by just one per cent on a like-for-like basis, with its fourth quarter down 2.3 per cent due to weak client spending.
Headline operating profit reached £1.7bn, while adjusted free cash flow rose to £738m, underpinned by strong working capital management.
The company reported a 15 per cent operating margin, up 0.4 per cent points on a like for like basis.
This was driven by £85m in structural cost savings, primarily from the restructuring of Burson, Group M and VML, alongside disciplined cost control and a continued investment in AI and data.
Its UK market saw a sharp 5.1 per cent decline, while its key North American market slumped by just 1.4 per cent.
While its media division, GroupM, remained resilient, this was offset by an almost four per cent decline at the firm’s other global integrated agencies.
This was due to clients cutting back on traditional advertising spend.
In response, WPP is doubling down on AI.
Chief executive Mark Read announced the expansion of the company’s AI-powered platform, WPP Open, with AI investment increasing to £300m.
This accelerated investment is set to enhance competitiveness in the market.
“We have comprehensive efforts underway to improve our competitive positioning through new leadership at Group M, with further investment in AI”, he said.
Despite a cautious outlook, the company expects performance to improve in the second half of the year.