Rahul Sachitanand
Feb 25, 2021

WPP AUNZ nets $71 million in cost savings, significantly shrinks debt

The network sees revenue drop 14.1% and EBIT down 32.6% in 2020, but says business was more stable towards the end of the year.

WPP AUNZ nets $71 million in cost savings, significantly shrinks debt

At the end of a tough 2020, WPP AUNZ has managed to meet its $71 million cost cutting goals, the network announced. In the full year 2020 results, the agency group noted that $13 million in government subsidies, the establishment of two campuses in Adelaide and Perth, lower employee costs and reduced administrative costs all helped curb expenses last year. 

Meanwhile, WPP AUNZ also made significant improvements to its debt situation, which went down from $121.4 million to $17.2 million in 2020, driven by better cash collections and capital management. WPP AUNZ extended banking facilities worth $420 million in August 2020. WPP AUNZ saw its revenue decline by 14.1% and EBIT was down 32.6% for the year.

According to the network's filing, global integrated agencies, which includes media and creative services, saw revenue dip 10.4% in 2020, due to the pandemic, while public relations was down 21% and specialist communications, the digital units saw topline decline over 19%. Expectedly, large format production dropped almost 41% as lockdowns and confinements hurt the business in 2020. 

“Our transformation strategy means WPP AUNZ taps further into growing areas of the market like ecommerce, personalised advertising and digital consumer experience," Jens Monsees, managing director and CEO, WPP AUNZ stated. “With our creativity and technology capabilities we are well-placed to drive growth as the leading creative transformation company in Australia, New Zealand and South-East Asia." 

He added that having stabilised the business, the group is now moving to the ‘strengthen’ phase of its transformation strategy. "This is about embedding a strong foundation in our business to support growth," Monsees explained. "Our focus is on clients, talent, tech, solutions and operational excellence." According to a media statement, objectives of this next phase include net sales target of 3% to 5% growth and an improvement in operating margin of 3% to 4% in FY2021. 

WPP AUNZ’s GroupM business predicts a bounceback in media market demand in FY2021, with total market demand expected to increase by 15%, returning to 2019 levels of activity at the end of FY2021. Overall, the agency group has forecast net sales of $630 million to $650 million and headline EBIT between $85 million and $95 million for FY2021. “The market is bouncing back," Monsees noted. "January earnings were ahead of budget and above levels in January 2020 and January 2019, providing further confidence in the budgeted improvement in earnings for 2021."

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