The new boss of WPP has set out a dramatic structural overhaul intended to simplify the British advertising group\u2019s sprawling operations and save \u00a3500 million in costs.<\/p>\n
Cindy Rose, who was appointed to lead the company last year, said that its recent underperformance had been driven by \u201cexcessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution\u201d as she unveiled a three-year strategy aimed at returning the group to growth by next year.<\/p>\n
The traditional holding company structure, with hundreds of operating units, will be scrapped in favour of an integrated business around four divisions \u2014 WPP Media, WPP Creative, WPP Production and WPP Enterprise Solutions \u2014 across four geographic regions.<\/p>\n
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.<\/p>\n
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The former Microsoft executive said the plan would focus on \u201cstabilising\u201d the business this year, with underlying revenue expected to decline in the \u201cmid to high-single digits\u201d in the first half and on an \u201cimproving trajectory\u201d in the latter six months of the year.<\/p>\n
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.<\/p>\n
An annual cost saving goal of \u00a3500 million has been set for 2028, which will cost about \u00a3400 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.<\/p>\n
Rose<\/a>, 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.<\/p>\n 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 \u201cjust not where it needs to be\u201d.<\/p>\n However, she has made some early new business wins, including the global media account for Est\u00e9e Lauder, the beauty company, and the European media work for Henkel Consumer Brands.<\/p>\n