WPP Shares Down On Weak H1 Results, Dividend Cut; Backs FY25 Outlook

WPP plc reported sharply weaker first-half results, with profit before taxation plummeting 71% to £98 million and reported revenue declining 7.8% to £6.66 billion, alongside a 4.3% like-for-like decrease in revenue less pass-through costs. The advertising giant also trimmed its interim dividend by half to 7.5 pence, leading to a nearly 4.8% drop in its shares. Despite the significant underperformance, WPP maintained its fiscal 2025 outlook, projecting a continued 3% to 5% decline in like-for-like revenue less pass-through costs and a 50 to 175 basis point reduction in headline operating profit margin.

Analysis

WPP plc's first-half financial results reveal a significant deterioration in performance, characterized by a 71% plunge in pre-tax profit to £98 million and a 7.8% decline in reported revenue. The core industry metric, like-for-like revenue less pass-through costs, contracted by 4.3% in the first half, with the decline accelerating to 5.8% in the second quarter, indicating worsening business conditions. This severe profitability slump prompted the board to cut the interim dividend by 50% to 7.5 pence, a move that signals significant pressure on cash flow and contributed to a 4.8% drop in the company's share price. Despite the weak results, WPP maintained its fiscal 2025 outlook, which already forecasts a negative trajectory: a 3% to 5% decline in like-for-like revenue less pass-through costs and an operating profit margin contraction of 50 to 175 basis points. This suggests the poor performance was within management's grim expectations and that no recovery is anticipated in the near term.

Key Decisions for Investors

• The sharp contraction in profit, accelerating revenue decline in Q2, and 50% dividend cut signal significant operational and financial stress, warranting a cautious or bearish stance on the equity.
• Investors should not interpret the maintained 2025 guidance as a positive; the outlook itself confirms expectations for a full-year decline in both revenue and profit margins, locking in a negative forecast.
• Income-oriented investors must reassess their positions following the substantial dividend reduction, while all stakeholders should monitor for stabilization in the like-for-like revenue trend in subsequent quarters as a key indicator for any potential turnaround.