Shares in WPP (WPP) fell 8% to a new low of 250p after it published weak FY25 results and announced a strategic overhaul. Today’s drop took the global media group’s stock price to its lowest level in almost three decades.
| Share price: 250p (-8%) | PE: 7.5x |
| Market Cap : £2.8bn | Yield: 6% |
Large writedowns
For 2025, WPP posted a 10.4% drop in revenue less pass-through costs to £10.1 billion. Reported operating profit dropped a whopping 71% to £382 million due to sizeable goodwill and property impairment charges.
New CEO Cindy Rose put the results down to ‘excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution’.
‘While disappointing, I see huge potential as these issues are all within our power to fix and we’re already making great progress, added Rose.
Elevate28
Rose also set out a multi-year strategic plan to simplify the group, increase its appeal to clients and restore growth. The plan is to ‘stabilise’ the business this year, build momentum in 2027 and deliver ‘accelerated, high-quality growth from 2028’.
Instead of a holding company structure, the group will consist of operating four units serving clients across four regions. By simplifying the structure and cutting the portfolio, annualised cost savings are expected to reach £500 million.
‘We have everything we need to succeed’, argued Rose. ‘The momentum we’re seeing from the decisive action we’ve already taken gives me the confidence we’re on the right path.’
It was clearly time for drastic action at WPP, and hopefully the new CEO will be allowed time to see Elevate28 through. Importantly, most of the programme’s costs were ‘kitchen-sinked’ in FY25 with £755 million of goodwill and property impairments.
The group still needs to invest for growth this year, but a 12% to 13% operating profit margin target is encouraging. Revenue growth is likely to drop in H1, but Rose predicts an improving trajectory in H2.
Interestingly, there was bid talk circulating before Christmas, but we wonder if potential buyers might have missed their window. If WPP can show credible signs of progress under Elevate28, the shares could have significant upside potential.
Read the press release here: https://www.wpp.com/en/investors
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