WPP (WPP.L) said on Thursday that it would resume paying its shareholder dividend even as losses hit £2.5bn ($3.2bn) in the first half of its financial year, as the advertising giant concluded that the “toughest” phase of the coronavirus pandemic had now passed.
Losses at the London-listed firm, the world’s largest advertising company, ballooned during the period as it was forced to trim £2.7bn off the valuations of its subsidiaries due to the impact of the pandemic.
Though it is less than half the 22.7p that it paid during the same period last year, WPP’s decision to issue a 10p interim dividend took investors by surprise, since the company had warned that the crisis meant it would have to put shareholder payouts on hold.
“Assuming there is no second wave nor major lockdowns, the second quarter is expected to be the toughest period of the year, although we remain cautious on the speed of recovery,” WPP said on Thursday.
A key measure of adjusted revenue at the company fell by just 9.5%, which was better than analysts had forecast.
But revenue plunged by 23% in the UK during the second quarter, underlying the scale of the impact of the pandemic, which has seen many companies dramatically cut their advertising spending.
The company’s US arm saw a 10.2% fall in revenue during the period.
WPP said it was now on track to make cost savings at the upper range of its £700m to £800m target, having trimmed operating costs by 6.5% in the first half of the year.
“Our strategic transformation remains on track but as COVID-19 accelerates the change in our sector, we are accelerating our plans,” WPP said.
WPP said that it was now focusing on helping its clients develop better e-commerce strategies, noting the surge in online spending as a result of the pandemic.
"We are working with our clients to help them get back to business, adapt their marketing strategies at speed and reshape their operations for a new world. Brands are seeing increases in online sales of 100% and more, and we are supporting eight of our top ten clients on e-commerce strategies,” it said.