WPP Pursues Annual Savings of GBP275 Million by 2021

By Adria Calatayud and Oliver Griffin

WPP PLC (WPP.LN) said Tuesday that it will simplify its structure as the world's largest advertising holding company pursues annual savings of 275 million pounds ($348.1 million) by the end of 2021, adding that it will prioritize dividends over buy-backs over the next three years.

The London-based company said it expects to incur GBP300 million in restructuring costs over the next three years as it tries to make a break from its unwieldy structure and be better positioned to react quickly to client needs.

WPP has tried to offer a simpler structure, including combining creative and digital assets, since Chief Executive Mark Read took over the top role in September. As part of those efforts, WPP last month said it would merge its iconic creative agency J. Walter Thompson with digital unit Wunderman, weeks after uniting Young & Rubicam with VML.

WPP, which also houses agencies such as Group M and Ogilvy, said in October that it would look to sell a stake in its market-research unit Kantar.

Shares in the company are down nearly 40% in the year to date, as a series of guidance reductions and disappointing performances amid wider disruption in the advertising industry have followed the sudden departure in April of its founder and former CEO, Martin Sorrell, following an internal probe. Mr. Sorrell now heads S4 Capital PLC (SFOR.LN).

WPP said it anticipates full-year results in line with expectations, though like-for-like revenue for the year--less pass-through costs--is set to fall 0.5%. In October, WPP guided for like-for-like net sales to fall between 0.5% and 1.0% in 2018 and operating margin to decline by 1.0% to 1.5%.

WPP said it will balance targeted mergers and acquisitions with divestments. The company said it anticipates declaring a final dividend of 37.3 pence, which will deliver a full-year dividend of 60 pence, in line with the full-year dividend in 2017. The company intends to maintain its full-year dividend at this level, WPP said.

Write to Adria Calatayud at [e-mail]; write to Oliver Griffin at [e-mail]

(END) Dow Jones Newswires

December 11, 2018 02:46 ET (07:46 GMT)

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