WPP AUNZ profit increases despite revenue decline

WPP AUNZ continued to battle Covid-19 headwinds in the third quarter of its financial year, as its revenue fell 14.3% for the period, even as its headline earnings rose 15% thanks to its aggressive cost-cutting. While the network said plans to pare expenses were on track for the year, it admitted the forecast for the Christmas season was cloudy and would likely deliver dim numbers in the coming quarter. 

“We expect the Christmas period to be more subdued than previous years, and this will impact what is usually a strong fourth quarter for our business," Jens Monsees, the network's CEO and managing director since last October, said in a media release. "The market continues to be volatile in response to the pandemic, making it a challenge to predict client spend in certain areas. For this reason, we are not providing specific earnings guidance for the full year."

Overall for the nine months of its financial year, the numbers posted by WPP AUNZ provide a clearer representation of the challenges faced by the company. For example, its headline pre-tax earnings were down over 32% to $37.9 million, even as topline fell by 14.3% to $449.6 million. Despite these challenges, Monsees suggests the company is making some progress in a challenging time.

“The exceptional performance in a difficult year is a credit to our people across our brands, who continue to support the many clients we have, as we together, and in close partnership, sail these unchartered waters," he contended. "The recent recognition of Ogilvy as 2020 Agency of the Year in the Effie Awards, and AKQA as a marketing technologist leader by Gartner, demonstrate the quality of our brands and the strong position we have in the market.”

In such a challenging business environment, there were some obvious business units that were harder hit than others. For instance, the network's large format unit saw its topline fall 43.6% for the third quarter and 47.2% for the nine months of this year. While other businesses such as integrated agencies (10.3% decline), public relations and public affairs (-13.5%), specialist communications (-23.5%) all saw lesser topline declines.

Monsees, who kickstarted sweeping changes to recast the struggling business, is confident the network is headed in the right direction. “We are confident that our long-term strategy is taking us in the right direction to capture more client spend in digital marketing and infrastructure, which we have already seen grow substantially over the last year," he said. 

• See also: China and India drag down WPP revenue improvement in Q3