Advertising Giant WPP Suspends Dividend, Share Buyback Plan and 2020 Guidance
WPP PLC (WPP), the world’s largest advertising company, said it was suspending its dividend and share buyback plan, and withdrawing its guidance for 2020 as the coronavirus outbreak induced “significant uncertainty” leading to an increasing number of client cancellations.
“We expect our performance in March in markets experiencing significant COVID-19 outbreaks to be weaker than in January and February, impacted by government restrictions on movement and the consequent reduction in economic activity,” WPP said in a statement.
WPP’s shares have plunged to $31.88 from around $70 at the beginning of this year. (See WPP stock analysis on TipRanks) TipRanks’ database shows financial bloggers have a bullish outlook on the stock.
The London-based advertising giant said it was taking additional measures to cope with cash flow and profitability, which include cost reductions and spending cuts as well as tight controls on working capital. The measures are expected to generate annual savings of £700 million – £800 million in 2020.
WPP reported that as of December 31, 2019 it had £3 billion in cash and total liquidity, including undrawn credit lines of £4.8 billion. Net debt was £1.5 billion, down from £4 billion a year earlier.
Moreover the ad giant said it was producing health campaigns for governments and clients around the world including in Britain, where it launched an information service on WhatsApp. In addition, WPP said that 55% of its employees in China were back at their offices after health restrictions were lifted.
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