Moody's Affirms Baa2 Ratings Of WPP Subsidiaries With Negative Outlook

LONDON (Alliance News) - Moody's Investors Service late Thursday affirmed the Baa2 senior ...

Alliance News 14 March, 2019 | 5:53PM
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LONDON (Alliance News) - Moody's Investors Service late Thursday affirmed the Baa2 senior unsecured ratings of FTSE 100-listed WPP PLC's subsidiaries, while outlook remained negative.

Moody's said the affirmation of the Baa2 rating takes in to consideration WPP's progress with the disposals of 36 non-core businesses in 2018, raising GBP849 million in proceeds, and potential sale of majority stake in low growth Kantar, WPP's Data Investment Management division, in 2019.

Nonetheless, Moody's said WPP's Baa2 ratings continue to reflect its worldwide leadership in advertising communications & marketing services as well as its strong position in digital advertising.

The Baa2 rating also reflects the good liquidity position of WPP supported by GBP2.6 billion

of cash on hand and GBP2.0 billion of availability under its revolving credit facility at the end of 2018.

Meanwhile, the negative outlook reflects the advertising giant's weak recent operating performance, execution risks with its turnaround strategy and the ongoing industry-wide challenges it faces.

"While WPP is making good progress in executing its restructuring plan and strategic priorities focused towards reviving organic revenue growth by 2021 and has plans to reduce leverage through the sale of Kantar and other non-core investments, the negative outlook on the ratings reflects the weak credit metrics for the rating category, the execution risks associated with the successful delivery of the plan, and the structural pressures facing the industry," said Gunjan Dixit, a Moody's vice president, senior credit officer & lead analyst for WPP.

Looking ahead, Moody's said upwards pressure on the rating is unlikely in the near term as it would require WPP to show a sustained improvement in its operating performance.

However, WPP's ratings could be downgraded if its turnaround strategy fails to bring in the timely targeted results or the company will be unable to achieve debt reduction by executing timely asset disposals.

WPP shares closed flat on Thursday at 856.20 pence each.

By Evelina Grecenko;

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
WPP PLC 947.00
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