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Earnings

WPP reinstates dividend after delivering new work at pace

LONDON (Reuters) - WPP WPP.L became one of the first major British companies to reinstate its dividend on Thursday, after cost cuts paid off and the world's biggest advertising company won work to help customers market new expanded e-commerce models.

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The owner of Ogilvy, Grey and Hill+Knowlton agencies declared an interim dividend of 10 pence per share and said it would relaunch its share buyback when the environment stabilises. Its shares rose 5%.

WPP posted a fall in second-quarter underlying net sales of 15.1%, compared with the market consensus for a 20% drop, and it described its record of winning new work from clients as industry-leading.

Chief Executive Mark Read said trading improved in July and assuming no further major lockdown, the second quarter could prove to be the nadir.

“We’ve come out significantly better than we expected although we remain cautious about the outlook about the rest of the year given the economic events,” he told Reuters.

WPP pulled its dividend, share buyback and 2020 guidance on March 31 as it braced for the full impact of COVID-19.

Since then, many clients in travel or hospitality have scrapped marketing to save cash, but others have marketed new e-commerce channels and television commercials that once took weeks and now take 16 days to make.

It said it expected to deliver full-year underlying net sales in line with market forecasts - which would be a decline of around 11% - keeping it on a par with peers Publicis PUBP.PA and IPG IPG.N in exceeding expectations.

Analysts at Citi said the results should calm nerves. “We think for the stock to really start to recover, however, the group needs to see an inflection in growth in the second half,” they said.

WPP also took an impairment charge of 2.7 billion pounds ($3.6 billion), following the reassessment of acquisitions given the impact of the virus.

Reporting by Kate Holton; Editing by Paul Sandle and Barbara Lewis

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