WPP PLC (LSE:WPP) reported a sharp fall in profits for 2025 after recording significant impairment charges, while warning that trading conditions are expected to remain challenging into the first half of 2026, sending the company’s shares more than 8% lower following the announcement.
Reported operating profit dropped 71.2% year-on-year to £382 million from £1.33 billion, largely due to £641 million in goodwill impairments. Diluted earnings per share swung to a loss of 20 pence, compared with earnings of 49.4 pence in 2024.
Group revenue declined 8.1% to £13.55 billion. Revenue less pass-through costs — a key industry measure — fell 10.4% on a reported basis to £10.18 billion and decreased 5.4% on a like-for-like basis.
Headline operating profit decreased 22.6% to £1.32 billion, with headline operating margin narrowing to 13% from 15% a year earlier, representing a 1.8 percentage-point decline on a like-for-like basis.
Total adjusting items amounted to £939 million, including £641 million in goodwill impairments and £114 million related to property impairments. The company also incurred £68 million in restructuring and transformation expenses.
WPP proposed a final dividend of 7.5 pence per share, bringing the total dividend for the year to 15 pence, significantly lower than the 39.4 pence distributed in 2024.
Chief executive Cindy Rose said the group’s recent underperformance had been driven by “excessive organisational complexity, lack of an integrated operating model and inconsistent strategic execution.”
She added, “Our recent underperformance has been driven by excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution.”
Looking ahead to 2026, WPP expects like-for-like revenue less pass-through costs to decline by a mid- to high-single-digit percentage in the first half of the year, followed by improving momentum in the second half. The company guided headline operating margin to a range of 12% to 13%.
Adjusted operating cash flow before working capital is forecast between £800 million and £900 million, including approximately £250 million of cash restructuring costs. Excluding those charges, adjusted operating cash flow before working capital is expected to reach £1 billion to £1.1 billion.
In 2025, adjusted operating cash flow before working capital totalled £1.19 billion, down from £1.34 billion the previous year. Adjusted free cash flow declined sharply to £202 million from £738 million, while reported net cash inflow from operating activities fell to £724 million from £1.41 billion.
Average adjusted net debt stood at £3.4 billion, slightly lower than £3.5 billion a year earlier. Adjusted net debt at year-end was £2.17 billion, while the net debt-to-headline EBITDA ratio increased to 2.1 times from 1.8 times.
Across business segments, Global Integrated Agencies reported a 5.7% like-for-like decline in revenue less pass-through costs during 2025, with WPP Media down 5.9%. Other Global Integrated Agencies fell 5.6%, while Public Relations recorded a mid-single-digit decline. Specialist Agencies performed more resiliently, declining 0.7% for the year.
Regionally, North America revenue less pass-through costs decreased 4.6% like-for-like, while the United Kingdom declined 7.6%. Western Continental Europe fell 4.7%, and Rest of World revenues declined 5.9%, with India growing 3.8% and China contracting 14.3%.
Revenue from WPP’s top 25 clients declined 4.1% like-for-like in 2025. The company noted improved performance in healthcare accounts, although spending across several other client sectors weakened during the year.
WPP also unveiled a new multi-year strategy, “Elevate28,” aimed at delivering £500 million in annualised gross cost savings. The programme is expected to require approximately £400 million in cash costs over two years, with a significant portion of savings planned to be reinvested into media, commerce, production and enterprise solutions.
Leave a Reply