WPP shares soar as advertising group shows signs of recovery

By Paul Sandle

LONDON, Aug 6 (Reuters) - Shares in WPP jumped as much as 29% on Thursday after Britain's biggest advertising group reported better-than-expected first-half results, reinforcing investor confidence that Chief Executive Cindy Rose's turnaround plan was taking hold.

The company said trading improved during the second quarter despite the ongoing impact of account losses, lifting the shares to their highest since September, shortly after Rose took over.

WPP, which owns the Ogilvy agency, reported revenue less the costs paid on behalf of clients of £4.75 billion ($6.39 billion), down 4.7% on a like-for-like basis in the first half, while the second-quarter decline narrowed to 2.8%.

Analysts had expected a 6.5% decline for the half. Headline operating profit fell 2.7% to £398 million.

Rose said she was encouraged by the performance.

"While legacy account losses continue to weigh, Q2 saw a further sequential improvement in like-for-like growth, highlighting the momentum we are building across the company," she said.

Since taking over, Rose has simplified WPP, bringing its creative agencies under a "WPP Creative" umbrella, alongside media, production, and enterprise solutions businesses.

The changes were part of a broader effort to revive growth at the company, which lost its position as the world's largest ad group to France's Publicis in 2024.

Rose said the building blocks for the turnaround plan were "firmly in place", with the goal of returning WPP to growth sometime in 2027.

That would mark WPP's first sustained period of organic growth after years of shrinking revenue and losing major clients to Publicis and others.

NEW BUSINESS BOOST FROM AI

Rose said WPP topped the rankings for new business in the last nine months, citing clients including Estee Lauder, Jaguar Land Rover, Henkel and others.

She also highlighted strong client retention, including Huawei in China, Tesco in Britain and L'Oreal in Australia. "We can drive even further improvement in our client retention rates," she told reporters.

WPP sold 15 non-core assets in the period and more disposals were likely, Rose said, as she continues to look for rationalisation opportunities, including WPP's 40% stake in market research group Kantar.

AI is reshaping the advertising industry, allowing campaigns to be produced more quickly and cheaply while challenging agencies' traditional model of charging clients largely for people and time.

WPP has invested in its AI and data capabilities to better target consumers and anticipate consumer behaviour, with Rose pointing to work with Coca-Cola during the World Cup that helped boost sales of the soft drink by 5% in the quarter.

While AI would put short-term pressure on pricing, Rose said it would ultimately allow WPP to capture a greater share of clients' marketing budgets.

"On balance, my view is unequivocally that AI represents a growth opportunity for us," she said.

($1 = 0.7431 pounds)

(Reporting by Paul Sandle; editing by William James and Elaine Hardcastle)