• by Steve McClellan  @mp_mcclellan, March 1, 2019

WPP shares were up more than 7% in early trading on the London Exchange after the holding company posted results that exceeded expectations and showed improvement in the fourth quarter.

Reported revenues for the year were down 1.3% to £15.6 billion ($20.6 billion).

Fourth-quarter organic net revenue was down 0.7%, improved versus the third quarter's 1.5% decline. Organic net revenue excludes the impact of M&A, currency fluctuations and pass-through costs.

Full-year organic net revenue was down 0.4% ahead of guidance.

The company recorded a £234 million charge against earnings in the fourth quarter as part of a plan to right-size underperforming businesses, address high-cost severance markets and simplify operational structures. 

In addition to mergers within the company and asset disposals, the charges also include transformation costs for initiatives such as co-locations in some cities, IT transformation and shared services. Total transformation and restructuring costs for 2018 were £302 million.

Charges were partly offset by exceptional gains of £235 million, primarily related to the gain on the sale of the Group’s investment in Globant S.A.

In North America, fourth-quarter organic net revenue was down 5.7% a slight deterioration from the third quarter ( -5.3%). The company said the continuing struggle there reflects “continuing challenges in our advertising businesses, with data investment management and healthcare also slower, partly offset by a significant improvement in public relations and public affairs.”

For the full year, organic net revenue in the region was down 4.2%.  

The comparable numbers in other regions were better. The UK was nearly flat, while other regions were low-single-digit positive.

WPP warned that 2019 will be a year without growth. Organic net revenues will be down 1.5% to 2% according to current guidance.

WPP CEO Mark Read stated: “We are showing early signs of success in attracting new business and new talent to WPP. The newly formed VMLY&R, for example, has enjoyed a strong start, with client wins totaling $25 million in its first 90 days. The quality of our creative work has been exceptional, with six WPP spots featuring at this year’s Super Bowl and work, such as Grey’s ‘The Best Men Can Be’ for Gillette, demonstrating once again the global impact of what we do.”

Added Read: “We are at the beginning of a three-year turnaround plan, but WPP’s new positioning as a creative transformation company with stronger, more integrated, more tech-enabled agencies is already proving effective, having driven several of our recent new business successes."

During a meeting with analysts today Read provided more details on the firm's implementation of the turnaround plan.