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WPP hikes dividend and lauches buybacks as ad industry growth returns faster than expected

Published: 08:25 05 Aug 2021 BST

WPP PLC -
WPP produced adverts for Bumble starring Serena Williams

WPP PLC (LSE:WPP) hiked its shareholder returns and full-year guidance as it swung back to profit after a stronger-than-expected second quarter.

The FTSE 100 advertising and marketing group said the market recovery in the first half of 2021 has been “much faster than expected”, with its GroupM division making a big improvement to its forecasts for the year, with global advertising growth of 19% predicted for the year after the 6% decline in 2020.

With digital media expected to grab most of this growth, digital media spend is now predicted to increase 26% in 2021, up from a 15% estimate in December.

WPP reported revenue of £6.1bn for the half-year, or £4.9bn after pass-through costs, up 9.8% and 5% respectively year on year.

Second-quarter like-for-like underlying revenue was up 19.3%, compared to 3.1% in the first quarter, with the US up 12.6% and Greater China up 1.4%, but outdone by 32% growth in the UK, India at 30% and Germany at 20.3%.

Reported profit before tax of £394mln swung from a £3.2bn loss a year ago, while net debt was down to £1.5bn from £2.7bn a year earlier.

An interim dividend of 12.5% has been declared, up 25%, with a £248m share buyback also launched today and with another £350mln planned for the second half of the year.

Chief executive Mark Read said the group made “very good strategic progress” and won key contracts with AstraZeneca, Bumble, JP Morgan Chase and Pernod Ricard.

“Our focus on data, commerce and technology, through strategic acquisitions, organic investments and the launch of Choreograph, has supported a strong new business performance.”

For the full year he now guides to growth in like-for-like revenue less pass-through costs of 9-10%, having previously guided to a mid-single-digits percentage, which would represent a return to 2019 levels a year ahead of previous plans.

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