WPP PLC (LON:WPP) said it does not expect to return the levels of growth seen before the pandemic until 2022 but from that point onwards earnings should pick up again.
The FTSE 100 advertising and marketing group said recent trading has been in line with previous forecasts with October and November’s net like-for-like revenue down by 6.7% and an 8.4% decline for the eleven months of this year to date.
Headline operating profit margin is expected to be 12.5-13.0%, reflecting a very strong performance on cost reduction, WPP added, with net debt at the year-end to be around £1.6bn.
WPP also announced a rebasing of its dividend going forward, with the new policy to be a payment of 40% of annual headline earnings while its share buyback scheme will restart in 2021.
As part of the company’s growth plans, Mark Read, chief executive, said it intends to increase capital spending to between £450-500mln over the next two years with £200-400mln per year allocated for acquisitions.
From 2023 onwards, Read said the target is to grow net revenues by 3-4% a year including acquisitions, with margins rising to between 15.5-16%.
Earnings are forecast by the group to rise by double-digits over the next three years.
Read added: “We are converting our size into scale, making us more effective and efficient as we share expertise across a simpler company of stronger agency brands. £400 million of the targeted £600 million savings will be used to fund investment in the capabilities and technology.”