WPP (LSE:WPP) shares have fallen more than 70% over the past five years. And full-year results for 2025 didn’t offer any help.
I’ve been cautiously optimistic about the chances of a recovery. But it’s not happening yet, after a disappointing 2025 results update hammered the WPP share price by another 5% in early trading Thursday (26 February). It hit another in a recent line of 10-year lows. Am I wrong to think we might be near the bottom now?
Strategy update
The 2025 figures were poor, with revenue down 8.1% over the previous year. Headline operating profit plunged 23%, and year-end adjusted net debt rose by another 24%. As-reported numbers were worse, showing operating profit down 71%.
But shockingly bad though these results undoubtedly were, they weren’t what this latest update was really about. No, they’re eclipsed by a major strategy shakeup under new CEO Cindy Rose.
The company announced “‘Elevate28’, a multi-year strategic plan to simplify and integrate our client proposition, restore growth and drive long-term value for clients, talent and shareholders.” WPP plans to move from “a holding company structure to a single company.”
Right now, it’s a mess of different global businesses, which really aren’t as joined-up as they should be. A sprawling and badly-focused company like this provides easy pickings for the nimbler moves others are making with their increasingly AI-based offerings.
Costs and savings
Rose was brutally open: “Our recent underperformance has been driven by excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution.” But she added that “these issues are all within our power to fix.”
Her new plans will come with costs, estimated at around £400m spread over the next two years. But the company expects to generate £500m of gross savings by 2028 — so it should more than pay for itself in that alone.
And the planned new company structure sounds like music to my ears: “WPP will become a single company, streamlined into four operating units across four regions, all unified by our pioneering agentic marketing platform, WPP Open.”
Short-term outlook
These plans sound suitably ambitious. But pulling the company to pieces and putting them back together again will bring pain. There’s a lot to get through along the way. And that includes 2026, which sounds like it’ll be another tough year.
Management sees like-for-like revenue less pass-through costs dropping “in the mid to high-single digits in the first half of 2026.” That should improve in the second half, though. Headline operating margin should remain weak, in the 12% to 13% range. Adjusted operating cash flow, after new Elevate28 strategy costs, should be between £800m and £900m.
Long-term aims
New boss, problems laid bare, fundamental strategy shift: WPP is ticking all the right boxes for me. Is this a hugely risky time to consider buying? Without a doubt. There’s a lot to be put right. But my optimism is still there. I’ll see what things look like at the halfway stage before I decide.
