Sparks

To have met WPP’s higher end of earlier guidance of flat year-on-year revenue (less pass-through costs), the company needed Q4 to show an improvement in client confidence. That did not materialise, resulting in the group coming in at the lower end of the guided range – a decline of 1%. The improvement in headline operating margin to 15% would have been higher but for the drag from currency. The cash flow performance was better than anticipated, though, with year-end adjusted net debt down to £1.7bn.

WPP is increasing its investment in WPP Open, its AI, data and technology marketing and operating system, from £250m to £300m. It is already being used extensively across the organisation and with external clients, and is set to contribute to improving margins in future periods.

Guidance for the current year is for a decline of up to 2% on revenue (less pass-through costs), with the upper end being flat year on year, and progress weighted to the second half (ie the usual pattern), with operating margins stable at the 2024 level. This seems to imply no anticipation of improvement in underlying market sentiment. The medium-term target is for like-for-like growth of 3% and an improvement in margins to 16–17%, which, at the moment, feels a long way off.