WPP AUNZ unveils new corporate strategy after profit drop

Local arm of global advertising and communications business follows up disappointing financial results with a new vision to get back to growth

WPP AUNZ has announced a strategy shake-up after posting disappointing results including a $235.5 million loss during the first-half of its 2020 financial year.

The holding group posted a headline earnings per share loss of 9.6 per cent in the 2019 full-year results with sales down 4.4 per cent, despite strong cashflow conversion and reduced debt from the sale of Kantar, its global data, research, consulting and analytics business. Continuing business contributed net sales of $712.5 million, down 2.6 per cent year-on-year, which converts to before tax and interest earnings of $91.8 million at a margin of 12.9 per cent.

And the disappointing results follow the local Australian and New Zealand outfit’s huge $253.5 million loss in the first half of last year, attributed mostly to the loss of goodwill from soft media spending and loss of customer accounts.

In a statement, WPP said global integrated agencies segment faced headwinds in 2019 from some brands having global and local accounts losses, amplified by a weak media market and economic conditions throughout the year. It expects 2020 to continue to be a challenging environment for this segment.

In response, WPP today announced a raft of changes and new initiatives, all part of a new corporate strategy aimed at returning to positive growth margins. The new strategy for the region, including South-East Asia, centres around the central pillars - transform, strengthen and grow.

The goal is to accelerate organic net sales growth into 2022 by expanding further into experience, commerce and technology offerings and expanding its client base with new clients wins and growing existing accounts with a more coordinated approach to leads and engagements. It also plans on reducing operating costs and embarking on a targeted acquisition program to drive growth.

WPP AUNZ will focus on six key areas: Operating model, clients, talent, platform, solutions and geographies. The group has already commenced the transformation phase of its strategy announcing a new leadership strategy, restructuring New Zealand operations and establishing a centre of excellence to consolidate the technology consulting operations.

Specifically, WPP AUNZ managing director and CEO, Jens Monsees said the business intends to ramp up creative capability and traditional skillset “with technology to capture growing areas of ecommerce, technology and experience”.

“As technology advances, the way consumers connect and communicate with brands is also evolving rapidly,” he said.

The restructure of its operating model, which includes the new centre of excellence, will see a reduction in brands and a boost to data and tech capabilities. WPP said it aims to build a client-first approach and develop talent acquisition and retention programs.

Platform developments include shared services across HR, IT, finances and legal to reduce costs. It will look to selected acquisitions to bolster capabilities and focus on opportunities in the region and house its brands under the oner roof in each of its locations.

“We are confident in our ability to change gear and create a future of opportunity and success. No-one in our market is yet leading the future of consumer communication and that is where we want to be,” Monsees said.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.


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