WPP interim results 2026: Q2 improves but the turnaround still has work to do

WPP's first-half results offer investors some early evidence that the advertising group's turnaround is moving in the right direction. The decline in client spending moderated during the second quarter, margins edged higher and management maintained its full-year guidance.

However, this is not yet a return to growth. Revenue fell, earnings per share dropped sharply and WPP recorded another substantial first-half cash outflow. Legacy account losses are also still weighing on performance.

The central question for investors following WPP PLC is whether the early improvement can develop into sustainable organic growth.

WPP's key first-half figures

Key figure	H1 2026	H1 2025	Change
Revenue	£6,373 million	£6,663 million	-4.4% reported
Revenue less pass-through costs	£4,745 million	£5,026 million	-5.6% reported
Headline operating profit	£398 million	£412 million	-3.4%
Headline operating margin	8.4%	8.2%	+0.2 percentage points
Reported operating profit	£261 million	£221 million	+18.1%
Headline diluted EPS	15.1p	20.0p	-24.5%
Adjusted operating cash flow before working capital	£309 million	£363 million	-14.9%
Adjusted net debt	£2,935 million	£3,261 million	-10.0%
Interim dividend	7.5p	7.5p	Unchanged

Revenue less pass-through costs is the income WPP retains after costs directly passed on to clients are removed. It is generally a more useful indication of the group's underlying activity than headline revenue alone.

Like-for-like, or LFL, figures adjust for currency movements, acquisitions and disposals to provide a cleaner comparison with the previous period.

The full figures can be found in the original company announcement.

The decline moderated during Q2

First-half revenue less pass-through costs declined 4.7% LFL. That is clearly weak, but the quarterly movement provides a more encouraging signal.

The equivalent decline narrowed to 2.8% in Q2. WPP Media improved from an 8.3% decline in Q1 to a 2.8% decline in Q2, helped by better spending trends among existing clients, a smaller drag from net new business and easier comparisons.

WPP Creative also improved sequentially, moving from a 6.3% decline in Q1 to a 3.5% decline in Q2. WPP Production remained the strongest part of the group, growing 1.6% across the half and 1.3% in Q2.

The regional picture followed a similar pattern. APAC and LATAM returned to modest growth during Q2, rising 0.3% and 0.9% respectively on an LFL basis. North America remained the weakest major region, declining 4.3% in Q2 and 6.0% across the half.

There is an important caveat. Management acknowledged that easier comparisons contributed to the improvement. Investors therefore need to see continued progress after this benefit fades.

Margins held up better than revenue

Headline operating profit fell 3.4% to £398 million, but the headline operating margin increased from 8.2% to 8.4%.

That margin resilience came from lower staff and severance costs, along with wider cost savings. Total headline operating costs fell 5.8% to £4,347 million, while average employee numbers declined from 105,958 to 97,490.

Reported operating profit increased 18.1% to £261 million. This improvement was largely due to lower adjusting items, including the absence of the £116 million goodwill impairment charge recorded in the previous period. It should not be confused with a comparable improvement in underlying trading.

There were also signs of pressure below operating profit. Headline diluted earnings per share fell 24.5% to 15.1p, reflecting lower operating profit, higher finance costs and a higher effective tax rate.

The headline effective tax rate increased from 18.3% to 33.5%. WPP explained that the prior period benefited from non-recurring tax credits following the resolution of a tax matter.

Elevate28 is moving from presentation to execution

WPP says the first phase of its Elevate28 plan remains on track. The programme is intended to simplify the group, improve collaboration and make greater use of AI and shared technology.

The company has reorganised client delivery around four operating units and four regions. WPP Open acts as the central technology platform linking media, creative, production and enterprise services.

Management is targeting £250 million of gross run-rate savings by the end of 2026, equivalent to approximately £100 million of savings within the year. The broader objective is £500 million of gross annualised savings by 2028.

WPP also expects disposal-related cash proceeds of at least £200 million during 2026. This could provide useful balance sheet flexibility, although the eventual contribution will depend on the assets sold and the terms achieved.

Commercial progress included account wins involving The Estée Lauder Companies, Henkel and Wendy's, alongside retentions such as Tesco, Skechers and L'Oréal in Australia and New Zealand. The financial contribution from these wins was not disclosed.

Cash flow and debt remain key risks

WPP's cash performance improved substantially against the previous year, but it remained negative.

Adjusted free cash outflow narrowed from £1,272 million to £725 million. Reported net cash outflow from operating activities improved from £1,036 million to £660 million.

Working capital produced an £807 million outflow, compared with £1,348 million previously. The latest figure included a £180 million benefit from amendments to IFRS 9 accounting rules, as well as the usual seasonal timing of client activity and payments.

Adjusted net debt stood at £2,935 million, £326 million lower than a year earlier but £768 million higher than at the end of 2025. The year-on-year comparison also benefited by £125 million from the IFRS 9 amendments.

Average adjusted net debt to headline EBITDA increased from 1.98 times to 2.18 times. That rise makes cash conversion, disposal proceeds and cost control particularly important during the second half.

Guidance is unchanged, but still points to contraction

WPP continues to expect second-half revenue less pass-through costs to decline by a low to mid-single-digit percentage on an LFL basis.

Full-year headline operating margin guidance remains between 12% and 13%, while adjusted operating cash flow before working capital is expected to reach £800 million to £900 million.

Management also expects second-half margins to decline by up to approximately 200 basis points year on year. This reflects planned investment in growth initiatives and the rebuilding of employee incentives.

The interim dividend has been maintained at 7.5p per share. It is payable on 2 November 2026 to shareholders on the register on 9 October. The board continues to intend to pay a total dividend of 15.0p for 2026.

What WPP needs to prove in the second half

The positive interpretation is that WPP's rate of decline is moderating, its cost base is becoming leaner and its new operating structure is now in place. Margin improvement despite falling revenue is also a useful sign of discipline.

The less comfortable interpretation is that organic revenue is still shrinking, major client losses remain a drag and headline earnings are falling faster than operating profit. Cash flow is still negative and leverage has increased on the 12-month measure.

For the turnaround to gain credibility, investors will want to see further sequential revenue improvement, evidence that new account wins are replacing lost work and a stronger second-half cash performance. Delivering the promised savings without undermining client service or future growth will be equally important.

These results represent progress in stabilising WPP, rather than proof that the business has returned to health. The second half now needs to show that the better Q2 trajectory can be sustained.