ii view: WPP unveils return-to-growth plan

Full-year results to 31 December

• Adjusted revenues down 5.4% to £10.18 billion
• Operating profit down 17% to £1.32 billion
• Operating profit margin down 2% to 13%
• Final dividend of 7.5p per share
• Total 2025 dividend down 62% to 15p per share 
• Average adjusted net debt down 3% to £3.4 billion

Guidance:

• Expects adjusted revenues to decline by mid to high-single digits in H1 2026, with an improving trajectory in H2 
• Expects operating profit margin of between 12% and 13% in 2026

Chief executive Cindy Rose OBE said:

"My first six months as CEO have only reinforced my conviction that WPP is an extraordinary company. As our clients navigate uncertainty, AI disruption and macro-volatility, we're looking ahead with a clear and focused mission: to be the trusted growth partner for the world's leading brands in the era of AI.

“The momentum we are seeing from the decisive action we've already taken gives me the confidence that we're on the right path to creating a WPP that is fit for the future and built to win."

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ii round-up:

Global advertising company WPP (LSE:WPP) today detailed a major transformation plan to try and inject growth back into business, although sales and profit forecasts for 2026 are below analyst expectations. 

Now headed by former Microsoft executive Cindy Rose, a new multi-year strategic plan called "Elevate28” will look to simplify the company, cutting £500 million of costs by 2028, as well as rationalising the business portfolio. A total dividend payment of 15p per share in 2025 is down from 2024’s 39.4p.

WPP expects 2026 adjusted revenues to decline by mid to high-single digits during the first half, although with an improving trajectory during the second half. Analysts had hoped for a more modest fall of around 3%. A forecast 2026 profit margin of 12-13% compares with 13% in 2025. 

Shares in the FTSE 250 company fell 4% and then later rose by 6% in UK trading having more than halved in 2025. Rival Publicis Groupe SA (EURONEXT:PUB) fell by just over a tenth last year, while Facebook owner and advertiser Meta Platforms Inc Class A (NASDAQ:META) rose 12%. 

Company services include core communication such as media buying and planning, as well public relations services and specialist agencies focused on industries such as healthcare. 

WPP’s new transformation plan looks to stabilise the business in 2026, build momentum in 2027, and deliver accelerating, high-quality growth from 2028 onwards. 

Adjusted full-year 2025 revenue fell 5.4% to £10.18 billion. An operating profit margin down 2% year-over-year to 13% meant profit was 17% lower at £1.32 billion.

A first-quarter trading update is likely to be announced mid-to-late April. 

ii view:

Started as a maker of wire baskets and teapots called Wire and Plastic Products, WPP today employs around 100,000 people. Global integrated agencies generated most sales during 2025 at 88%, followed by specialist agencies at 7% and public relations the balance of 5%. Geographically, North America accounted for most 2025 sales at 37%, with the UK significant at 15%, Europe 21%, and the rest of the world the balance of 27%. 

For investors, uncertainties regarding the outlook for the economy and the exact impact of AI now persist. New business pitch activity declined 60% over the first half, caused by economic strains in China and curtailed spending among technology clients following investment booms during the pandemic. US trade tariffs continue to create uncertainty in client demand across its biggest North American region, while the advantage of tech companies pushing ad services and able to develop their own AI coding such as Google owner Alphabet Inc Class A (NASDAQ:GOOGL) and Meta, warrants consideration.

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On the upside, a growth plan is now being implemented by new head and former Microsoft executive Cindy Rose. A simplified business portfolio could see business sales resulting in disposal proceeds being returned to shareholders via share buybacks. Investment in AI and data was already being made under former CEO Mark Read, while increased financial flexibility given the dividend cut still leaves the shares on a yield of around 5%.   

For now, and while existing income investors may decide to remain patient, more cautious investors are likely to await evidence of a turnaround in profit. 

Positives: 

• Diversified product and geographical offering
• New growth plan to 2028

Negatives:

• Advertising demand is historically cyclical
• Foreign exchange movements can hinder

The average rating of stock market analysts:

Hold