WPP is to ‘fundamentally reposition’ itself in an overhaul that will result in a ‘simpler’ structure, according to the company’s latest investor update.
The three-year restructuring plan, announced today, will incur cash costs of £300m as the company aims to achieve annual savings of £275m by the end of 2021.
At the centre of the new plans is a simplified structure focused on four areas: communications, experience, commerce and technology. The streamlining includes the merging of VML and Y&R, and Wunderman and J. Walter Thompson announced earlier in the year.
WPP will cut 3,500 jobs worldwide as part of the strategy, with plans to hire 1,000 staff, meaning the job losses would total 2,500. Eighty offices will close, with 100 to merge as a result of the plan.
The company will close its ‘unsustainable operations’ and dispose of underperforming businesses.
WPP said it had received ‘numerous’ unsolicited expressions of interest in Kantar, which the company wants to sell but retain a stake in. If a transaction is agreed, it is likely to be announced in the second quarter of 2019, according to WPP.
Mark Read, chief executive officer of WPP, said: “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.”
The restructure will allow for more investment in creativity, technology and talent, according to Read. The company said it would invest an incremental £15m a year for the next three years in creative leadership, with a focus on the United States.
Read described the approach as a “radical evolution” that would drive “sustainable, profitable growth” for shareholders.
The company has established an executive committee, comprised of corporate and company leaders, to implement the plans.
WPP’s medium-term ambition is to generate organic growth in line with its peers by the end of 2021.