The new boss of WPP has set out a dramatic structural overhaul intended to simplify the British advertising group’s sprawling operations and save £500 million in costs.

Cindy Rose, who was appointed to lead the company last year, said that its recent underperformance had been driven by “excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution” as she unveiled a three-year strategy aimed at returning the group to growth by next year.

The traditional holding company structure, with hundreds of operating units, will be scrapped in favour of an integrated business around four divisions — WPP Media, WPP Creative, WPP Production and WPP Enterprise Solutions — across four geographic regions.

Its UK operations, which suffered a 7.6 per cent revenue decline last year, will be subsumed into the European, Africa and Middle East segment.

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The former Microsoft executive said the plan would focus on “stabilising” the business this year, with underlying revenue expected to decline in the “mid to high-single digits” in the first half and on an “improving trajectory” in the latter six months of the year.

The headline operating profit margin is also expected to plateau at between 12 per cent and 13 per cent for the year, broadly in line with 13 per cent last year.

An annual cost saving goal of £500 million has been set for 2028, which will cost about £400 million to achieve over a two-year period, alongside plans to sell some of its assets. Some of the savings would be made by removing duplication and combining the human resources and back-office functions of some of its agencies.

Rose, 60, refused to be drawn on what parts of its businesses may be offloaded, although there has been speculation that Burson, its public relations firm, was one candidate on the block.

WPP has been grappling with a series of high-profile client losses and a macroeconomic downturn that has prompted brands to pull back on advertising spending, which Rose acknowledged had contributed to a performance that was “just not where it needs to be”.

However, she has made some early new business wins, including the global media account for Estée Lauder, the beauty company, and the European media work for Henkel Consumer Brands.

WPP also faces questions around the effect of artificial intelligence, which threatens to complete some tasks more cheaply and quickly.

The shares, which have fallen by 66 per cent over the past 12 months, shed 10 per cent in morning trading but closed up 11½p, or 4.2 per cent, at 284p.

Jonathan Barrett, an analyst at Panmure Liberum, said that the market reaction partly reflected macroeconomic jitters and concerns about the potential impact of artificial intelligence. However, he added: “Really today provides a practical floor for the numbers and expectations.”

Underlying sales declined by 6.9 per cent over the fourth quarter, less severe than the 8.2 per cent fall forecast by City analysts. Over the year, sales were 5.4 per cent lower. Pre-tax profits declined to £131 million, from £1.03 billion a year earlier, which partly reflected a writedown in the value of its Ogilvy and AKQA creative agencies.

The annual dividend payment was more than halved to 15p a share in an attempt to shore up the balance sheet and create flexibility to invest. Average adjusted net debt was £3.4 billion, equivalent to 2.2 times adjusted earnings, which is expected to rise this year, before falling.

In October, the group warned that underlying revenues for the year were likely to decline by between 5.5 per cent and 6 per cent, worse than the 3 to 5 per cent contraction previously expected.

Rose is attempting to position WPP as an AI beneficiary, via its WPP Open platform. Last year, it invested £300 million in AI, a sum it expects to repeat in the coming years.