Yahoo Finance WPP advertising group to cut 3,500 jobs in £300m restructuring
WPP is to cut 3,500 jobs worldwide and shut or merge almost 200 offices as the embattled advertising group seeks to restructure after a torrid year that included the exit of its founder and chief executive Sir Martin Sorrell.
The restructuring, which will be revealed in full at a lengthy analyst and investor presentation on Tuesday, will include shutting 80 offices globally and combining operations of a further 100 in locations where business is slow.
The company is to cut nearly 4,000 of its 134,000 global workforce but would not say how many roles or offices would be affected in the UK. It has 400 ad businesses in more than 3,000 offices in 112 countries.
WPP said it would hire 1,000 creative staff as part of a refocus on the group’s roots, meaning the net job losses would total 2,500.
Pushing through the changes, which are aimed at simplifying the business, will incur a £300m restructuring charge over the next three years. WPP said it would ultimately save £275m annually by the end of 2021, half of which would be reinvested in the business.
The WPP chief executive, Mark Read, who took over after Sorrell was ousted in April, said the company had become “unwieldy with too much duplication” to operate efficiently in the digital age.
“We are fundamentally repositioning WPP as a creative transformation company with a simpler offer that allows us to meet the present and future needs of clients,” he said. “The restructuring of our business will enable increased investment in creativity, technology and talent, enhancing our capabilities in the categories with the greatest potential for future growth.”
WPP shares have tumbled by 40% this year as it cut sales and profits forecasts and lost a number of key clients, most notably a swathe of longstanding client Ford’s business, which is its biggest account globally.
Read has already moved to merge some of the grandest names in traditional advertising with newer more digital and data-led WPP operations. JWT, the world’s oldest advertising agency, is being combined with Wunderman, and Y&R is merging with VML.
WPP also said it has received numerous approaches for its research arm Kantar, which is valued at about £3.5bn and which the company wants to sell but also retain a stake.
The company said so far this year it has disposed of 16 non-core investments, such data business Globant and a stake in the ad tech operation AppNexus, raising £704m to reduce debt. WPP continues to hold stakes in businesses including Vice Media.
Organic net sales, the metric most closely watched by analysts and investors, were likely to decline by 0.5% this year, WPP said, which was better than the 1% drop it predicted in October.
