WPP - This Giant Advertising Company Reduced Leverage at Exactly the Right Time
Giant global advertising agency WPP plc (NYSE: WPP) has been through a lot over the last few years, and now it has to deal with the likely economic downturn from the world's reaction to the coronavirus pandemic. But the changes it made before the coronavirus hit have set it up well to muddle through this weak patch.
Here's what's been going on and a look at how much stronger WPP is today than it was just one year ago.
A few years ago, WPP was led by advertising legend Martin Sorrell. His strong personality and heavy-handed control of the company basically meant he was responsible for most major decisions. One of the key ways in which WPP grew to become one of the largest ad agencies in the world under Sorrell was by acquiring other agencies. And it acquired a lot of other agencies over a relatively short period of time, leaving company operations a bit disjointed and unwieldy and its balance sheet laden with debt. In a contentious move, Sorrell parted ways with the company in late 2018. At the end of that year, financial debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) stood at nearly 0.6 times.