Ad giant WPP to cut 3,500 jobs and spend £300m in revamp led by new boss

The group is aiming to make savings of £275m per year after losing 40 per cent of its value in the last 12 months

WPP was founded by Sir Martin Sorrell who left under a cloud earlier this year (Reuters)

Advertising giant WPP has announced plans to cut 3,500 jobs worldwide as part of a revamp of its strategy under new boss Mark Read.

The British owner of the JWT and Ogilvy agencies has lost 40 per cent of its value in the past year, and been forced to cut its sales and profit forecasts after it lost some major clients and other customers cut their spending.

On Tuesday the company set out its plans for improvement, and said it is targeting a return to sales growth, in line with its competitors, by 2021.

The firm said it plans to invest in its New York companies and cut costs by £275m per year by merging or closing offices and selling some of its businesses.

This will lead to job losses of around 3,500, the company said, although WPP added that it will hire a further 1,000 people, particularly focusing on creative and technology roles.

The restructure will cost the advertising multinational as much as £300m over the next three years.

Mr Read replaced WPP founder Sir Martin Sorrell, who left after being accused of misconduct., earlier this year.

“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,” Mr Read said on Tuesday.

“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.

“As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders.”

The group also said it would maintain and prioritise its dividend.

George Salmon, equity analyst at Hargreaves Lansdown, said simplifying WPP, which had “become sprawling to put it mildly”, was a sensible strategy.

However, he added: “Whether the new approach will be enough to counter the severe disruption facing the business is another question entirely.

“Dividend growth is taking a back seat, but given the overleveraged balance sheet and falling sales trends, that isn’t a surprise. In fact, confirmation the payout is to be held rather than cut will likely be taken as a positive, as will the implication that current trading isn’t deteriorating at the rate previously feared.

“Still, avoiding a dividend cut and confirming trading isn’t as bad as it could be are very much hollow victories. Looking forward, investors will want to see signs the group can thrive, not just survive.”

Shares in WPP rose 5.5 per cent on Tuesday morning.

Additional reporting by agencies