Teleconference Transcript Thursday, 26 February 2026
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Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors at the time.
Cindy Rose, OBE
Chief Executive Officer, WPPGood morning everyone and welcome to our 2025 preliminary results and strategy update.
By the way, that's our new brand refresh - created by our Landor, Amp, and Man versus Machine, WPP agencies - all powered by WPP Open.
I am delighted to welcome you to our One Southwark Bridge campus here in London which, in many ways, is symbolic of the future of WPP. A modern, adaptive and collaborative workspace for our talent, clients and partners.
So the plan this morning is I will start with some opening remarks then hand over to Joanne Wilson, our Chief Financial Officer to share our 2025 Preliminary Results, then we'll return to share our Strategy Update before we open up to Q&A at the end.
Before we get started, I'd like to recommend that you take a moment to read this cautionary statement while I get out of your way.
Joanne and I will be joined on stage by Brian Lesser, CEO of WPP Media when we get to the media section of the presentation and most of my senior management team are in the audience today as well.
Let me start by saying WPP is an extraordinary company, built from agency brands with remarkable histories some going all the way back to the 1800s. Some are still well known today, others have evolved into new parts of WPP. Together they have deep roots in creating iconic work that moves people and shapes culture.
We serve some of the biggest, most demanding clients in the world and help steward and grow some of the most well-known brands on the planet several of whom you'll hear from and see referenced throughout today's presentation.
Our business model is very simple; we exist to make our clients successful. When we help our clients build brands that matter, drive meaningful engagement with their consumers and deliver outcomes for their business, it drives growth for them and growth for us.
However, it's clear that what's made us successful in the past will not make us successful in the future. As you can see from the numbers we released this morning, our performance is not where it needs to be. Yes, there are some externalities we can point to, market volatility and economic headwinds, but our results also point to the need for us to embrace a single unified growth strategy, execute with increased rigor, and evolve as the needs of our clients evolve.
After several years on the Board, I took this role with a clear thesis in mind as to what we needed to do differently. We've spent the past 6 months as a team validating this thesis through rigorous analysis and by speaking directly to our clients and actively listening to their feedback.
And the good news is we haven't been waiting for today's presentation to take action, we've already made several decisive changes, and you can start to see the positive results in our recent new business success.
In the fourth quarter of 2025, WPP was No 1 in JPMorgan's net new business rankings for the first time since 2020 with a series of excellent client wins across our media, creative and integrated offer. These include being appointed the UK Government's lead media agency, Reckitt and Henkel media in Europe, Kenvue and Haleon creative globally, TruGreen media in the US, Norwegian Cruiselines global media and Suncorp media in Australia, just to name a few.
I'm delighted to say that we have maintained this strong momentum into 2026 winning Jaguar Land Rover global media and integrated services. In fact, the impact from new business wins in 2026 already exceeds the impact of new business wins for all of 2025 combined and its only February!
While the turnaround of our business will take time, our momentum is undeniable and these wins give me huge confidence that we are firmly on the right path. My team is united, committed and hungry to win.
Today's session is the culmination of months of detailed work by our team. We have a bold plan to make WPP a simpler more integrated company, one that's fit for the future and relentlessly focused on growth and brilliant execution. Personally, I'm excited to be here at this time of such revolutionary change and privileged to lead WPP as we play a defining role in shaping the future.
I'll come back shortly and talk about our view on the evolving landscape and our growth plan for the new WPP, which we're calling Elevate28.
But I'd like to first hand over to Joanne to take you through our 2025 results.
Joanne Wilson
Chief Financial Officer, WPPThank you Cindy. Good morning everyone and can I add my warm welcome to you today.
So let me start by taking you through the main financial headlines for 2025.
Like for like revenue less pass-through costs fell 5.4% for the full year due to client assignment losses and spending cuts. This was slightly better than our most recent guidance for a decline of -5.5% to -6.0% and reflects a Q4 LFL decline of -6.9%, a deterioration from the third quarter decline of 5.9%.
In the context of the weaker top line, we delivered a headline operating margin of 13.0%, in line with our expectations and down 180bps year on year on a LFL basis.
Fully diluted EPS was 63.2p, a decrease of 28.4% YoY with the impact of reduced headline operating margin and a higher headline effective tax rate, partially offset by lower net finance costs and non-controlling interests.
Turning to cash flow, our adjusted operating cash flow before working capital was £1.2 billion, down from £1.3 billion in 2024, and at the top of our most recent guidance range and includesing
£82 million of cash restructuring charges.
On my next slide, I have provided some colour on our net sales performance both for the fourth quarter and across the full year. Please note that we have included more detail in the appendix to this deck.
You have some of the detail here on trends by business, region and client sector but I thought it would be more useful to unpack trends by theme to help give a sense of what is WPP-specific and what is more market driven.
When we consider what is WPP-specific, the major negative impact to call out both for the full year and for the fourth quarter is the impact of gross client losses which deteriorated through the year. This was driven by the impact of incremental losses in year in 2025. By segment, this particularly weighed on Media, by geography on the US and the UK, and by client sector on CPG and TME.
Against this, we had the positive impact of new business wins from 2024 which indeed contributed progressively through the year. The aggregate level of 'in year' wins, however, was lower than we initially expected, and significantly below what we have experienced over the past number of years. This was in part because of a lower win rate but in the main because of a lower level of aggregate new business activity - industry estimates are that global pitch activity was down double digit.
While we saw an encouraging new business performance in the fourth quarter with the wins of Reckitt, Henkel, the UK Government, Pizza Hut, NCL and JLR, the impact on our LFL performance is expected to take time to ramp up, and we expect the overall net new business headwind to sustain into the first half of 2026.
The final theme to call out is spend by existing clients. We characterised the year as one of more cautious spending from clients with a higher degree of volatility than we would typically expect. The impact was seen most strongly across the CPG, Auto and Tech & Digital services sectors and while many of our businesses were impacted it weighed most heavily on Ogilvy.
The waterfall chart on this slide bridges our headline operating margin from 15.0% in 2024 to 13.0% in 2025, a 1.8 percentage point deterioration on a LFL basis.
There are a number of moving parts, starting with staff costs excluding severance and incentives, on the left. These reduced by £576 million on the back of lower permanent headcount, which ended the year down 8.7%, , and reduced use of freelancers, which was down 14% year on year. However, due to the lower revenue, this resulted in a 180bps drag on margin.
This was amplified by the impact of increased severance and other associated costs, which was up £89 million in the year, taking a further 100bps off margin.
We increased investment levels in WPP Open, AI and data and this was more than funded by a reduction in back office costs leading to a net reduction in tech spend and other costs of £128 million, Again with the impact from lower revenues, this translated into a 60bps drag on margin.
These drags on margin were offset by a 50% reduction in staff incentive payments, to £182 million, providing a margin cushion of 140bps (equivalent to 120bps LFL excluding FGS). Taken together, this resulted in a net move in margin of 200bps on a reported basis and 180bps LFL, which excludes around 20bps of impact from the disposal of FGS Global and from FX.
Moving to my next slide we show our headline income statement. Overall reported revenue less pass-through costs, was £10.2 billion, a decrease of 10.4% year-on-year on a reported basis.
Headline Operating Profit was £1,321 million, down 22.6% year on year on a reported basis and is consistent with an operating profit margin of 13.0%.
Net finance costs of £274 million were slightly down year-on-year on lower average net debt and lower interest rates.
Our effective tax rate increased to 32.0% given the lower profit base and the impact of non-deductible fixed elements. By contrast, non-controlling interests of £43 million was down year-on-year partially driven by disposals.
Headline diluted EPS of 63.2p was down 28.4% on a reported basis.
The Board has recommended a final dividend of 7.5p, giving a total dividend of 15.0p pence for 2025. While this is a reduction year-on-year, it represents a stable dividend from the first half and underlines our commitment to maintaining shareholder returns.
We include a full reconciliation between our headline and reported financials in the appendix. The main items I would call out are the impact of restructuring programmes s well as further goodwill impairments of £641 million which primarily relate to our integrated creative agencies and property impairments of £114 million, both which are non-cash in nature.
This next slide bridges the year on year movement in Net Debt which ended 2025 at £2.2 billion vs £1.7 billion in 2024.
Our adjusted operating cashflow before working capital was £1.2 billion and reflects a lower level of cash profit partially offset by a lower level of capex and a year on year decrease in cash restructuring costs, which came in at £82 million.
Working capital saw an outflow of £334 million, primarily driven by the temporary impact of reduced staff incentives, adverse FX movements and business mix. Within this trade working capital, excluding the impact from FX, was broadly flat YoY. We remain disciplined on our working capital management and saw an improvement in underlying operating metrics year on year, including reduced overdues.
We saw an outflow of £70 million from earnouts of £65 million and the net impact of dividends to minorities/from associates. Earnouts have decreased year on year and are expected to continue to progressively fall from 2026.
Net interest and tax contributed to a total net adjusted free cash flow of £202 million. Note that the tax payment included £43 million of one-off taxes related to the disposal of FGS Global.
Turning to uses of cash, M&A spend was £147 million largely related to the acquisition of InfoSum while cash dividends amounted to £343 million. Adding in the impact of buybacks at £97 million to offset dilution from incentives, and other factors including FX, our spot net debt was £2.2 billion, up £500 million year on year.
Now my next slide provides more detail on our overall net debt and leverage profile.
As we have always said, we think it is more prudent to look at average adjusted net debt through the year, rather than the year-end level which typically benefits from a favourable working capital position.
Average adjusted net debt was slightly down year on year at £3.4 billion, compared to
£3.5 billion in 2024.
However, given the lower headline EBITDA, the average adjusted net debt to headline EBITDA ratio for 2025 was 2.2 times, up from 1.8 times in 2024.
While our leverage ratio has increased, our overall maturity profile stands at 5.8 years, and the average coupon on our debt is 3.5%. We also completed a successful 1 billion euro bond issue in December 2025, which more than covers our 650 million euro bond maturity in September 2026.
We have no covenants and as of December 2025 we had £4.4 billion of liquidity including an undrawn committed RCF of $2.5bn which does not mature until 2031.
Furthermore I am pleased to share that today Fitch Ratings has assigned WPP a BBB rating with a stable outlook, reinforcing our Investment Grade balance sheet.
On my final slide, I have shared guidance for 2026 across key financial metrics.
We will talk about the impact of our strategy update later this morning, but for 2026 we are setting the following parameters in terms of headline guidance.
LFL net revenue growth is the most important metric for judging our business but it is a lagging indicator with account losses continuing to drag for around 12 months after they first start to impact. Meanwhile, new account wins take time to bed in and move toward steady state.
For the year as a whole, we estimate gross client losses will represent a 500bps-600bps drag, an increase from the 300bps-400bps in 2025. At the same time the positive impact on LFL from gross client wins in 2026 already exceeds that for the full year 2025. While it is still early in the year to indicate the impact of net new business on the full year we do expect it to be a more significant drag in the first half than in 2025.
We are encouraged by the new business performance in the fourth quarter, the performance year-to-date and the nature of the pitch pipeline, and as a result we anticipate a progressively improving impact from net new business through the course of the year.
Reflecting all of this, we are guiding to LFL revenue less pass through costs down [mid to high-single digits in the first half of 2026 with an improving trajectory in the second half]. We also anticipate that the first quarter will see the weakest LFL for the year.
On profit, there are a number of moving parts that will impact headline operating margin. On the positive side, we will benefit from the annualised impact of cost actions taken in
2025 alongside a part year benefit from the cost initiatives we are implementing as part of our new strategy. We also expect a lower impact from headline severance costs.
Against this, we will continue to invest in WPP Open, AI and data, as well as our growth drivers and also expect to rebuild our incentive pools. Cindy and I will share greater detail on both the growth drivers and cost initiatives as part of our Strategy Update.
Taking all of that into account, we anticipate headline operating profit margin in the range of 12% to 13%.
Turning to cash flow, we continue to focus on adjusted operating cash flow before working capital as the most important metric, reflecting the potential for volatility in the year-end working capital position.
Including both the anticipated costs associated with historical plans as well as the restructuring costs linked to the Elevate28 plan, we anticipate adjusted operating cashflow before working capital of £800m to £900m.
This includes total anticipated cash restructuring charges of c.£250 million, of which around £190 million are associated with the Elevate28 plan. Excluding these charges, we would anticipate adjusted operating cashflow before working capital of £1.0bn to £1.1bn.
Finally, in terms of leverage, given the expectation of a further moderation in headline EBITDA, we would anticipate average leverage metrics to move up further in 2026. We do, however, expect average net debt to remain broadly stable and note that any proceeds from asset disposals during the year will be used to strengthen our balance sheet, providing a greater degree of financial flexibility.
You will find more detail on other modelling assumptions for 2026 in our preliminary results press release.
So that is it from me for now and I will hand back to Cindy who I know is keen to share our strategic update.
Cindy Rose, OBE
Chief Executive Officer, WPPThank you Joanne.
The first thing to say is that I fully recognise that recent years have been disappointing from a shareholder perspective. I acknowledge that our performance on the core metrics like net sales, margin, free cash flow, is disappointing and no one is more determined than I am to turn this around.
As I said in my opening remarks, I took this role with a clear thesis as to what we needed to do differently, and we've spent the past 6 months as a team validating this thesis through rigorous analysis and by actively listening to feedback from our clients.
There are plenty of reasons for optimism and I'll get to those in a moment, but first I thought it only appropriate to share with you some of the feedback we received from our clients. The feedback has been clear and consistent and not only supports my thesis but provides an excellent blueprint for what we need to do differently.
Clients pointed to the fact that our complexity got in the way of true client obsession. We were siloed and hard to navigate. We haven't been intentional about evolving our integrated proposition to adapt to the changing needs of our clients. And it's taken too long for us to land our data proposition; our media business has suffered as a result.
The good news from my perspective is that all these issues are fixable and, as I said earlier, we've already started to do so.
While it's true that our performance hasn't been where we want it to be, it's also true that WPP is full of potential and has all the ingredients we need to win.
We have incredibly talented hard-working people with deep domain expertise who do amazing things every day for some of the most demanding clients in the world
We have world class capabilities that span the entire marketing workflow from media, commerce, creative, PR, production, digital experiences, software engineering, data, AI and more.
We've have made smart investments in technology over multiple years that have now enabled us to build WPP Open into a powerful future facing agentic marketing platform, giving us real competitive advantage.
We have a presence in over 100 countries around the world which means we're able to service the most complex multinational multi brand clients in the world. We have a scaled media offer and partnerships with every relevant player in the ecosystem.
And maybe most importantly of all, we have an ambitious, competitive, high-energy team that is ready to embrace change and hungry to win.
So notwithstanding the challenges, I stand here with immense optimism because we are at a pivotal moment in WPP's journey. We're not just adapting to change; we are actively shaping our future, building a WPP that is more agile, more connected, and more powerful than ever before. A WPP that is simpler to work with, fit for the future and built to win. A WPP that is obsessed with the success of our clients and as a result, delivers better returns for shareholders.
Our strategy starts with a new mission; to be the trusted growth partner for world's leading brands in the era of AI. Valued for combining cutting-edge media intelligence and trusted data solutions , world-class creativity and next-generation production, and transformative enterprise solutions to help clients navigate change, capture opportunity and deliver growth.
There are 4 key objectives of our strategy and we're going to unpack these in some detail, but just to summarise, our objectives are:
to drive superior growth for our clients
to become a simpler more integrated company
to leverage our agentic marketing platform WPP Open for competitive advantage
And to create firm financial foundations for the future
As I said earlier, the turnaround of our business will take time, and we've already made a promising start. To support our growth strategy, we've built a detailed execution plan that broadly spans three distinct phases.
Our immediate priority is to stabilise the business, make the structural changes needed, strengthen our execution and win and retain clients to sustain our current market momentum. The next phase is about building on these foundations and returning the company to growth sometime during 2027 and the third phase will be about accelerating our growth so we can capture our fair share of the market from 2028 and beyond.
And to summarise what you can expect from this plan in terms of outcomes:
The stabilisation of our performance in the near term and a return to growth some time in 2027
Gross cost savings of £500m over 3 years
Re-allocation of investment against our key growth priorities, and
A more focused portfolio, an investment grade balance sheet and greater financial flexibility.
So that's the basic framework and timeline of our growth strategy, and what you can expect in terms of outcomes, which we'll unpack in more detail.
But before we do, I want to step back if I may and do a bit of scene setting to offer some outside in perspective on how we see the world changing, the needs of our clients evolving and the opportunity of AI.
For some time now, we've known that our industry is experiencing a dramatic transformation. With the rapid diffusion of AI, we're not just seeing incremental shifts in consumer behaviour, this is a complete metamorphosis of the commercial ecosystem.
Brands are now discovered in AI-driven conversational search. The old barriers that protected established brands are gone-creators and influencers can reshape consumer preference and launch new brands in an instant.
Media is everywhere, and in everything. It's no longer episodic and campaign driven. It's a continuous, always-on stream where social, search, and physical spaces blend together.
Commerce is the new organising principle. Every interaction is shoppable, and we are rapidly shifting to agentic commerce where AI agents do the shopping on our behalf.
Trust is scarce and must be earned daily. In a world of synthetic content and deep-fakes, brands need to balance hyper-personalisation with personal privacy.
And as the world is flooded with AI-generated content, demand is increasing for verifiable human creativity, craft, empathy, and taste as key brand differentiators.
These changing dynamics are not fleeting trends. The acceleration of AI is unstoppable and, as I said, its driving a complete metamorphosis of the commercial ecosystem.
This is the reality our clients are navigating every day - the fragmentation, complexity and pace of change are dizzying and paths to growth much harder to find.
It's never been harder or more urgent to build compelling, trusted brands that endure for generations and provide competitive advantage and long-term enterprise value.
To cut through the noise to find new growth audiences in this environment, brands need to embrace strategies grounded in deep data insights, real time signals and AI that acts on these signals at the speed of light.
In this perpetually changing environment, clients don't need more traditional marketing agencies, what they need is a new playbook for growth and a trusted partner to help them build it and operationalise it.
A partner that operates as an intelligent orchestration layer across creativity, media, commerce, data and technology and who fuses technical expertise and breakthrough creative thinking into one cohesive approach to modern brand building.
At WPP, we work with some of the most consequential brands and clients on the planet (Coca-Cola, Unilever, Nestle, Kenvue, Ford and many more), we know how to navigate disruption, find signal in noise and help our clients build news paths to growth.
For many clients, this new playbook for growth means real transformation at every level. I've spent the last decade delivering largescale technology transformation to enterprise clients and it's not easy.
Clients need to have AI ready data foundations, agentic tools and governance need to be in place, people need to be trained and skilled, processes need to be re-imagined. There are no short cuts when it comes to AI transformation, every client I meet is going through it and they all need our help.
For WPP to seize this opportunity, we need to evolve from being a collection of traditional marketing agencies to being a trusted partner for growth and transformation, helping our clients build modern marketing capabilities and move boldly and confidently into the future.