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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the WPP First Quarter 2020 Trading Update Conference Call and Webcast. [Operator Instructions] Today's conference is being recorded. Mark Read, please go ahead, sir.
Thank you very much, George, and good morning, everyone, and welcome to our first quarter trading update. I'm joined here by John Rogers, our CFO; and Peregrine Riviere, who heads up our Investor Relations efforts. And thank you all for joining, and I hope that you're all safe, as are your friends and family. It's a difficult time, and our thoughts, clearly, are with all of those affected. And all of us at WPP are very thankful to the efforts of the health care workers and other frontline and essential workers who are doing so much to keep us safe and help us manage through the current time. I assume that everyone has the slides in front of them. We'll move to the second slide, our safe harbor statement. I think it's important that everyone reads that before we start. So we turn to Slide 3, the agenda. I'll make some brief introductory remarks, and then John will take us through the financial performance, and then John and I will -- and I'll come back and talk about the business update, and then John and I will take your questions at the end of the formal presentation. So turning to Page 4, our COVID-19 response. There's really been 4 areas that we've been focusing on over the last 8 to 10 weeks. The first clearly is to maintain the health and safety of our people. That's our #1 priority. And we had sent everyone at home from work on March 16. So 95% of the 107,000 people from WPP have largely been working from home since then. It's clearly an anxious time for them. I think they're doing a fantastic job in providing an uninterrupted service to our clients. Clients are our second priority. I think we remain extremely close to our clients with constant daily contact with them by video and working really to help adapt their plans to the current environment to understand what's going on at the moment and increasingly to start to think about what the world will look like when they come out at the other side. If I look at our customer satisfaction scores that we've done during this period, they're actually up, which I think is positive. And I think that lays testimony to the work that our people are doing and to the continuity planning that we've been doing and the efforts of Andrew Scott, our COO; and Jacqui Canney, our Chief People Officer, in helping people and their teams manage their way through that. At the same time, we have been focused on our third priority. I'll remind you of the purpose of WPP, to use the power of creativity to help our people, clients and communities who have shared some of the work that we've been doing to help communities manage through this situation. And then lastly, I think it's been a critical area of focus to ensure our financial resilience to protect all of our stakeholders. So that's really been our focus as we come through this. So the highlights on Page 5, the Q1 highlights. It was a good start to the year. Outside of Greater China, the business grew by 0.4%. We made a number of improvements against our strategic goals. But clearly, the business was impacted by COVID-19 in March with revenues or net sales down 7.9%. It had a significant impact and will have a significant impact in the second quarter, but we do have a well-diversified business in terms of clients, geography and services, and we can get into that later in the presentation and in the Q&A. I think it's important to mention we have the excellent net new business performance. New business has been continuing. We won more than $1 billion of new business in the first quarter. We've had no significant losses year-to-date. I'm very pleased to have won the global business for Intel, media business for Hasbro, Novo Nordisk, the creative services from Discovery in the United States, among other clients. We do have a strong liquidity balance sheet, thanks to the disposal program. We come into the situation with the lowest level of net debt in the company since 2007. So unlike the financial crisis, the company is in a much stronger position financially, and we have GBP 4.4 billion of cash and undrawn facilities, and John will detail that further. We've taken significant impact to mitigate impact of COVID-19 on our profit and our cash flow. And with all of that, we've really tried to balance and protect the business. I mean one complexity of this is it's both an economic and a health crisis and we are cognizant of that. At the same time, WPP is a people business. And while it is a truism, people are our greatest asset. And we do want to ensure that we protect as many jobs as we can as we go through this, and I think you'll see from John's presentation how we've done that. We are very cognizant of being ready for a rapid recovery, as we have seen in China, albeit not the levels that existed before the pandemic. So it's really been a balance of taking cost action. So those are really sort of the highlights in the first quarter. I'll now hand over to John to take you through the details of the financial presentation and financial performance. Thank you, John.
Thank you, Mark, and good morning, everyone. I'd like to take you through the financial results for the first quarter 2020. So turning, please, to Slide 7. So starting with the revenue less pass-through costs by sector. In Q1, we saw the global integrated agencies saw like-for-like revenue decline of 2.6%, weighed down by decline in March of 6.6%, reflecting the impact of COVID-19 on our business and in line with our expectations. Our public relations business was down 1.4% on a like-for-like basis for the quarter and 4.4% in March and relatively more robust performance given our client needs for specialist PR services in a challenging time. Our specialist agencies were down 7.4% like-for-like, dragged down by a 15.2% decline in March, reflecting the project nature of this business. Overall, revenue less pass-through costs were down 3.3% on a like-for-like basis, reflecting a decline of 7.9% on a like-for-like basis for March.So turning now to Slide 8, please, and revenue less pass-through costs by region. North America was our best-performing region with like-for-like sales down 1.9% for the quarter and 3.6% in March, which compared to Q1 2019 where like-for-like sales were down 8.8%. So we think of this direction of travel as being encouraging. The U.K. was down 4.2% for the quarter, had a tough March, down 9.8%, reflecting the impact of lockdown in the second half of the month. Similarly, Western Europe was down 3.7% in the quarter and 9.6% in March, reflecting lockdowns in Italy for about 3/4 of the month, France and Spain for roughly half of the month and Germany for the last week of the month. Net sales were actually hardest hit in the rest of the business, down 4.6% in the quarter and 11.5% in March, reflecting a challenging quarter for China, albeit with relatively stronger performance in India and Brazil, which leads us nicely onto Slide 9, please, and looking at our performance by country and our top 5 markets. So as you can see, the U.S., which went into lockdown in mid-March, depending on which particular state, but was down 1.9% in the quarter and 3.7% in March, will be, as I said earlier, a relatively better performance than for the same quarter last year. The U.K., which went into lockdown around the 23rd of March, having been up in February, was actually down 9.8% in March and down 4.2% for the quarter. So quite a tough March period there for the U.K. business. Germany, which went into lockdown slightly later -- sorry, on 22nd of March, was actually up in January through Feb, but was down 14.9% in March, dragging the quarter down 4.3%. Greater China, which went into lockdown much earlier, in early January, was actually down 17% in January and February and further hit by 29.9% in March, so down 21.3% for the overall quarter, albeit it's important to recognize that we were actually down 8% in Q4 of 2019, so it will likely be the impact of COVID-19 reflects that delta between the 21.3% and the 8%. And we are actually starting to see some signs of economic recovery and a return to work in China. So it's been a fairly rapid recovery. India was actually up 8% in Jan and 13% also in February, so a very strong start to the year but was hit by 1.1% decline in March. So overall, up 6.1% for the quarter, a creditable performance on the back of tough comps year-on-year. So turning now to Slide 10 and performance in some of our other major markets. So France was down slightly in January and February and down further in March by 7.1%. So down overall by 4% in the quarter. Italy was, by far, the hardest hit European country, was actually down 12% to 13% in January and February and then down a further 23.7% in March for overall 16.2% down for the quarter. And of course, Italy went into lockdown much earlier than most of the European countries, around the beginning of March. Spain went into lockdown from the 14th of March, was actually flat in March and up overall 3.8% in the quarter. So arguably bucking the trend that we are seeing across most of our other Western European countries. The strong performance there from Wunderman Thompson and Ogilvy and Wavemaker, encouraging signs. Brazil was up 8% to 9%, January through February, but down 16.7% for March. So quite a big decline there month-on-month, dragging the overall quarter negative at 1.3%, albeit on the back of relatively tough comps in the prior year, the prior year delivering a 9.3% growth. So turning now to Slide 11 and new business. And Mark mentioned some of these successes earlier on, but we had a very strong quarter for new business, winning over $1 billion of work. So Mark's already mentioned, WPP won the Intel creative business, one of the largest creative pitches in years, where we've taken responsibility for branding, advertising and production. Wavemaker was also assigned the global media responsibility for Novo Nordisk. And there were wins for Grey in Discover, for MediaCom in Hasbro, for Mindshare in PLAYMOBIL, for MediaCom again in P&G and for VMLY&R in BASF. So some very encouraging wins there in the early part of the year. And also pleasing to note that we had no material client losses in the quarter.So turning now to Slide 12 and improvement in our net debt year-on-year. I wanted to make 2 observations here. First, as Mark mentioned earlier on, our net debt is down significantly year-on-year. So from GBP 4.6 billion to GBP 2.8 billion, of course, reflecting the sale of Kantar. The second point I want to make is that actually the movement within trade net working capital, which is always an outflow in this period of the year, was actually a smaller outflow in the first quarter of 2020 than in the first quarter of 2019, reflecting tighter working capital management and an improvement of 3 percentage points in terms of our percentage of invoices overdue for this period. So encouraging signs, and I think there's further work that we can do to further improve our working capital position. So coming on now to Slide 13 and uses of our free cash flow. So firstly, you'll see overall net disposals of GBP 139 million, being offset by GBP 285 million of share buybacks in the first quarter of the year. And when you add that to the GBP 44 million of buybacks we made in December 2019, that totals to GBP 330 million buyback program as part of the Kantar proceeds. But as previously announced, we have suspended that share buyback program for now. And the business also has ample liquidity. Mark's already mentioned we've got GBP 4.4 billion of undrawn facilities and surplus cash available to the business. And indeed, if I turn to Slide 14, you'll see the nature of the liquidity available to the business. Total facilities, you'll see there at the bottom, of GBP 7.2 billion, of which only GBP 2.8 billion are actually currently drawn down. So we've got GBP 4.4 billion available to us today with a weighted average coupon of 2.7% and a weighted average maturity of 7.9 years. And as you'll see there, very well spread out over that time frame, the only facilities that we have due repayment coming up in May 2020, and that's a EUR 250 million bond facility. So turning now to my last slide, Slide 15. I mean the business has executed or is in the process of implementing an extensive program of actions to protect the business and our people from the impact of COVID-19. First, as we've already announced in relation to costs, we've taken immediate actions in terms of hiring freeze and freelancer reviews and delays to pay rises and stopping discretionary spend as well as the salary sacrifice at the Board level, and that has delivered with in-year savings of GBP 700 million to GBP 800 million. Those actions have all been implemented, and those savings are already being delivered as part of our plan. We've also tightened up our capital expenditure, GBP 100 million reduction in CapEx budget. Actually, I think we may end up delivering a little bit more than that. But at the moment, we're projecting GBP 130 million or GBP 140 million savings. And as I've already talked about, continuous review and close monitoring of our working capital position, and we've seen an improvement year-on-year in terms of our percentage of overdue debtors. And as I mentioned earlier, significant opportunity to further push and save further working capital as we work through the year. As previously announced, we've also suspended our share buyback program and I suspended our final dividends. And between those 2 decisions, that's given us an immediate cash saving of GBP 1.1 billion, adding to our overall liquidity availability. On an ongoing basis, we've also identified further cost actions such as reduced working hours, salary sacrifice, which Mark's already talked about with the 3,000 of our most senior people signing up to that, real testament to the values in our business, and some permanent headcount reductions, too. Now we've -- as you know, we've removed guidance for the full year. We don't know the impact and the longevity of COVID-19. But what we have done is developed a range of possible economic scenarios with different levels of net sales progression and decline. And we've got detailed plans against each one of those scenarios to take costs out accordingly as well as very good early indicators in the business to inform us as to where we would need to accelerate taking those costs out. So I'm very comfortable that we've got the ability to respond to whatever the market may throw at us. And at the same time, I've been in the business now for about 12 weeks. There is, in my view, material longer-term efficiency potential. And indeed, we have started already to look at ways in which we can accelerate some of those efficiencies as we look to the weeks and the months ahead. And so with that, I'll hand you back to Mark to take you through the business update. Thank you.
Great. Thank you very much, John. And I'm going to try to give you a little bit more color and context on what we're seeing on Page 17 in terms of our people, our clients and our communities. So turning first to Page 18 on people. I think we have seen a really effective response to the lockdown. And by effective, I mean both a great degree of collaboration across the company and really an uninterrupted service to our clients over the period. A few points to work -- to make. Firstly, 95% of our people are now working remotely or working from home. I think a number of them, markets who're starting to think about going back to work, we're approaching that extremely cautiously. We've been very cognizant of the need to provide regular support and regular communications to our teams. We're doing regular town halls by market, by video. And I think one of the observations I'd make about the period is, whereas previously may have thought we had to fly to a market to talk to people, we're now realizing that we can achieve maybe not 100% on the same effect, but much the same as I talk to people over video. Each of our company CEOs is also leading the way in talking to their companies about what they're doing, and we're encouraging our teams and managers to hold regular communications. We've launched something called WPP TV, 4 days a week for 0.5 hour, where we feature some of the many talents we have across WPP and try to create a sense of community across the organization with mental well-being really a particular focus for us at the current time. And this is not an easy time for anybody. I don't think it's easy for people with families, it's not easy for people who live alone. I think it's particularly difficult for the more junior members of the company. Perhaps they don't have the same houses and gardens that senior executives have. So we're very cognizant of what we need to do. And technology has been a great help in helping us do that. We've been pushing the adoption of Microsoft Teams across WPP for the last 3 or 4 years, I'd say with some trouble, but we've seen 60x the adoption in the last 6 weeks. So really shows kind of the speed of adoption of new technology in the current time. And as John said, our goal has been to protect jobs wherever possible. And I'm very proud that more than 3,000 people have taken the salary sacrifice. We have instituted a much stronger internal jobs market. And one of the side effects, I'd say positive side effects, of stopping external hires has been to encourage people to look internally for resources, which we're seeing, and to collaborate much more across companies in terms of getting work done. We're also upping training and development at the current time, particularly with our partners. We see this -- although people are extremely busy, we do see this as a time where we can invest more in training and in development, and we are doing that. On Page 19, our work with clients, I'd say, was extremely fast. I mean compared to the financial crisis of 2008, 2009, I don't think this crept up on us in any way. And certainly, WPP with our extensive operations in China and then in Italy, I think we were quite well prepared for what would happen, and we did have strong business continuity plans that we were able to put in, in time. We've done some research in the U.S. that says that 84% of consumers will judge companies by how they respond at the current time, and I think you are, in the main, seeing companies respond extremely well with relevant communications, and we highlight here some work that Ogilvy did for Dove, a Unilever brand, which I think really highlights what you can do creatively and comes with a relevant message and contribution at the current time. But our focus with clients has largely been about replanning communications. I mean there's no doubt that all companies are financially impacted by the economic and health situation and by the lockdowns that have been imposed. So we have been responding extremely quickly. And I think working fast. And it's interesting, we're seeing campaigns that may have taken 2 to 3 months to get done, be done 1 to 2 weeks. We're replanning media to channels with higher ROI, and I'll move to that in a moment, but we have seen a greater amount of production taking place as we've seen some increase in demand in the short-term production with work that would have normally been shot, taking place with CGI, using stock photography, using animation. And in case -- in many cases, are people using their own homes and families to produce work for clients. And when we talk to clients about the logical investing, that we do ask them to focus on the ROI. And it's important, I think, for companies to stay in touch with their consumers. There are companies that have deep financial resources that are able to take advantage of the growth in audience and the higher ROI available at the moment, and there's no better time to advertise when your competitors silent. And I think at a time of great consumer change, it's important for companies to stay in market to really figure out ways to market when they come out the other side. On Page 20, we are seeing quite a lot of -- a range of client work from across the organization. I called out a few examples on this. We work with Colgate on a campaign called SafeHands to support the World Health Organization. They're making 25 million bars of soap available to the World Health Organization, our agency Red Fuse supporting them with that. They're also making further donations to help authorities around the world. And for Pfizer, we launched a new campaign, Science Will Win, which celebrates the role that science can play in fighting the virus. And that work came from a combination of Grey and Landor and Hill+Knowlton. I think it's really interesting to see the role that companies are playing in helping to combat the virus and for our client, P&G, the governor of Ohio approached the chief executive of P&G and asked for help in explaining the importance of social distancing to youth and Grey in New York and Cincinnati came back with the idea of using TikTok and an influencer Charli D'Amelio to communicate to youth the importance of social distancing. The clip has been viewed more than 10 million times, which is -- shows the power of using relevant social influencers to communicate with the audience and the importance of talking to people in ways that they understand and the Nike, [ AK ] created the Nike Run Club in Japan and China to help people exercise. And we've seen that through some research in Mindshare showing that 3 activities young people are taking part in is exercise -- they're exercising more, they're eating better and they're doing yoga. If we look at how clients, on Page 21, are allocating their spend, there's really, I think, a focus on driving ROI. And we see -- not to say a split between analog and digital, but a split between those channels that are used to be able to drive sales for clients and those channels where that's more difficult. And I'd say we are seeing a growth in digital media to drive sales, a lot linked to e-commerce channels, which are those companies that are able to fulfill through e-commerce channels. And clearly, among the winners from this situation will be Amazon, Alibaba, JD.com, who are able to sell in the current environment and even within the e-commerce providers, we're seeing those companies that can operate do better than those companies that are not. National television has been surprisingly resilient in those markets where it's hard to shift. And I think that there's some degree, continued pressure on television generally as well as radio. But I think some national TV commitments are holding up, but we are seeing in general pressure across all media. And those media such as newspapers, magazines, cinema and outdoor are clearly most impacted and perhaps we can discuss some of that on the Q&A. It's important as well in respect of WPP to understand the diversification amongst our client base. And while all companies are clearly impacted, some are more resilient than others, and we call out that 54% of our revenue come from the CPG, technology, health care and pharma sectors that are more resilient. And you can see that resilience in the first quarter. They grew by 4.9% versus those sectors that were more significantly impacted, in the automotive, luxury, travel and leisure, that were down 4% in the first quarter overall. And I'd say those performances were more divergent in March than they were in January and February. Turning to Page 23. Another element of our diversification is obviously our broad geographic spread. And here, we've tried to set out -- I wouldn't say in a scientific way, but as best we can, sort of the evolution of countries from outbreak through to recovery. And you can look -- these markets cover 75% of WPP's revenue. You can see that China is, to some extent, out the other side at 6%. Germany, Australia -- Germany is around 7% of WPP's revenues and Australia around 3% are approaching that. And other countries, France, Italy, Spain, we're seeing a somewhat easing code of restrictions. Now clearly, as John said, the second quarter is going to be tough. And I think we are very cognizant in our planning -- in our financial planning and in our modeling, that this is not a linear situation. There are restrictions being reimposed and that these things can reverse as well as go forward. So I think we are very cautious in our approach to forecasting, budgeting and what we do on cost. But I think you can see that the geographic spread of our operations will give us some diversification. And if we look at China, you can see that there was a very rapid recovery in economic activity. And on Page 24, we tried to outline some of the statistics and observations that our team in China would make about the business. From the lockdown, we're now operating at about 90% of our people in the office. I think we'll probably stay at about 90%. I suspect that we'll never go back to the 100% that we were at before. The #1 question I'm asked on our town halls is will working from home be more accepted in the future, and I think we will have more flexible working in the future. But we will at the same time have offices. You can see that retail sales are improving and online retail sales have grown at a stronger rate versus the decline in traditional retail sales. Interestingly, e-commerce in China is now 19% of FMCG spend. And I think one of the shifts that we will see in the current environment is a much greater shift towards e-commerce. And there are some statistics in the U.S. that suggest it shifted from 5% of grocery sales to 10%, something that would have taken 4 years to happen is now going to -- has now taken place in 4 to 6 weeks. We are seeing a much greater degree of innovation. And within WPP, we're seeing growth in demand for our e-commerce services. While the recovery is not back to the levels we've seen before the COVID-19 outbreak, we have seen some comments that we picked up from L'Oréal and LVMH on the speed of the bounce back. And I would say that these are 2 companies who we work with, who were very diligent in their preparations. They continue to spend, albeit at a lower level, during the outbreaks. They could sell online, and they have come back quite strongly as have automotive sales, and actually, you can see in the second week of April, automotive sales were up 14% year-on-year, having been down 35%. Now I think we need to treat all of these statistics with some degree of caution. Clearly, in China, the authorities have done an excellent job in containing the virus. Clearly, if you look at automotive sales, there's an element of pent-up demand. We wouldn't necessarily expect that 14% to continue for the rest of the year. So we are cautious, but I think that the lesson that we've learned is that the recovery can be very rapid. It does take 4 to 6 weeks for consumers to start to get back. And I think we are, as a result, cautious about the speed at which people will come back. But we can see how it happens, and we are starting, and increasingly, had a conversation with a client yesterday about -- CMO of a client, about what consumer behavior would look like now we are -- when we are out the other side and how they should start to think about that in their plans. I think the third area I wanted to call out on Page 25 is the work that we're doing to support our communities. And this is very important to WPP. And very important, I would say, to our people. And while we're not at the front line of the response, I think there's a major role that communications can play in mitigating the impact of the virus. And I'd like to call out some of the work that WPP agencies have been doing. In the top left, Group SJR and Glover Park Group, from helping the U.S. health authorities to communicate. On the top right here, in the U.K., Wavemaker have been working with the government and the health authorities in developing a service on WhatsApp to help answer people's health questions, and they're helping a lot with the government planning their media campaigns. And on the bottom left and right are 2 campaigns that WPP has been working on with the World Health Organization. Bottom left, Grey developed a campaign to celebrate the Five Heroic Acts, the role that ordinary people are playing in combating the virus. And on the bottom right, Scangroup, our agency in Kenya, has been working on a campaign for sub-Saharan Africa, which together with free media donated by our media partners, has launched in the last week, and we'll be rolling that out actually into other markets around the world because we are particularly concerned about the impact of the virus on developing markets. So that gives you a sense, I think, of what we're doing across people, clients and communities. And on Page 26, our immediate focus is on that, and it is on our financial resilience. We are planning market by market and thinking through when we can reopen. I would say that we will reopen gradually with the health and safety of our people as a priority, and it is a highly uncertain economic outlook. And what we're trying to do is balance the need of all of our stakeholders, of our people, of our clients, and our communities and our shareholders and navigate through this in the right way and trying to use the weapons at our disposal to do that in the best way. I think when we think about the future, if anything, the current situation is causing us to invest faster for the future. We believe that both creativity and technology will be equally and critically important in the future. There's no doubt that the ideas and ingenuity will be critical. There's no doubt that the world will be even more dependent on technology. And if you look at the shifts in behavior over the past 4 to 6 weeks, where I'd say very, very little area of economic or societal activity has been unchanged by technology. Just think about the way we meet, the way we shop, the way we consult with doctors, saw some statistics saying that 45% of doctors in America are now doing consultations over video, where we educate, my 2 kids downstairs currently being homeschooled. So everything that we do, I think, has been changed, and we will emerge in a world that will be very different, and we need to be and are prepared for that. Secondly, the steps that we've taken over the last 2 years to simplify and integrate WPP, particularly the creation of VMLY&R, Wunderman Thompson, integrating the sort of traditional analog and digital parts of our business into integrated powerhouses that can help our clients has been has been important and I think has helped us give clients the right advice over the last 2 months and I think will put us in a good position in the future. And thirdly, as John said, we do see further opportunities for operational effectiveness and for savings as we come out of it. And then lastly, I think, is very important, we are focused on the culture of WPP and our purpose. But while this has been a difficult few weeks from a financial perspective, I have been very reassured by the work that people are doing, the way people are working, the way our people have responded, the way our clients have responded. Indeed, I think, by the way, our society has responded, there's much good in what's happening at the moment despite the uncertain health and financial outlook, and I think we should take some comfort from that. So that's really our goal. I think in conclusion, it is going to be a tough second quarter and the balance of the year is going to be uncertain. I'm sure we'll get that -- into that in the Q&A. But I think as a company, we are ready. We have modeled the scenarios that come out in the future. But we do come into this situation in a very strong position financially, thanks to the actions we've taken over the last 2 years to strengthen the balance sheet and provide us with the liquidity that we need. I have no doubt that those companies that come into these situations in a strong position financially will emerge from it in the same place, and there no doubt will be opportunities for us in the future.So thank you very much for listening and that's where we are in terms of formal remarks. And we're happy -- John and I are happy to take your questions.
[Operator Instructions] And we will take our first question from Patrick Wellington from Morgan Stanley.
Yes. Couple of questions. Firstly, I think, John, you referred to material longer-term efficiency. Can you give us perhaps some idea of the scale of that? And to what extent a new pair of eyes and this very different situation makes you look at the WPP business model, which effectively is applying staff to projects? And then, secondly, whether this situation has led you to think that you could potentially further restructure your major networks. And then, Mark, I think your remarks about how efficiently and quickly your staff are working just kept reminding me of the phrase, faster, better, cheaper. Again, do you think there's a continuing working style change there in the future? And then, finally, just on working capital, reassuring in the first quarter. Can you tell us about the impact on customer payment terms, whether you see any further pressure and how you see working capital going for the year as a whole?
Okay. So I'll talk to you about -- to working and the networks, and John can talk about material long-term efficiency and working capital. So I think that there's work that would have taken 2 to 3 months that we're doing in a week, and I think we are learning new ways of working. And we have been learning those for some time. As we've pointed out to you in the past, we have a large number of people working on-site in our clients, and I think that will continue. So I think we will see some of the ways of working, not just working from home, but some of the faster ways of working continue in the future. And I think that, that will accelerate and that's a good thing. In terms of the networks, I think that the front office, if you like, the way in which we go to market is substantially correct. There may be some tidying up around the edges, but I think we want to look at sort of, what I'd say, the middle office, how we provide production services, media and technology, and there will be efficiencies there. And then the back office that John can get to and talk to both of those, John?
Yes. Thanks, Mark. Yes, look, I obviously, having been in the business for 3 months, starting to get my sort of head around the opportunity, but there's material opportunity to simplify and make this business more efficient. And as Mark says, across the front, middle and the back office, I think much of the work has been done, as Mark said, on the front office. But on the middle office and the back office, I think there's significant opportunity to go after. We've talked in the past about operations across HR, finance, procurement, property, IT, et cetera, as well as the middle office opportunity that Mark just referred to. We are actually in the process of trying to size the prize for that. So I can't give you details today on what we think the size of that opportunity will be, but that is work in progress. And once we've done that, we'll obviously report back to you as to where we see opportunity over the next 3 years or so. In relation to your question on working capital, understandably we are starting to see a few requests from some of our clients, particularly those in distressed sectors, looking for payment terms. We are, as you would imagine, trying to support our clients where we can. But as Mark has already highlighted, much of our client base is very robust in those sectors which haven't seen as big an impact in terms of COVID-19. And in fact, we were able in the quarter to deliver a relative improvement in working capital, actually lowering our debtor -- our percentage of outstanding debtors by 3 percentage points. So a fairly good improvement year-on-year. We obviously had a very good performance at the end of last year. I wouldn't want to get drawn on whether we think there will be a net inflow or net outflow this year, but I don't think it will be substantive either way, and I remain confident that there is a material opportunity to deliver further working capital savings, roughly 20% of our current balances are overdue. If you look at best practice, it's in single digits. So I remain confident there is further opportunity there. But at this stage, given all the uncertainty in the market going forward, I think it would be dangerous to try and predict or forecast what that opportunity might be.
And our next question comes from the line of William Packer from BNP Paribas.
It's Will. Firstly, the detail on the performance of the Chinese business has been very useful. Could you give us your view on how useful it is as a proxy for the rest of the business when we look into Q2? I'm thinking of factors like relative exposure to CPG, exposure to digital marketing versus traditional budgets and how that compares to your U.S. and European businesses.Secondly, thanks for the detail on the cost savings. Can you just confirm your thinking around furloughing now in your key markets? We're a number of weeks into the crisis. So can we conclude you will not use those schemes at scale and so there isn't much upside to the potential cost savings on that basis? And then, finally, any commentary on Chinese performance in April? Has it improved materially?
Okay. So why don't I tackle the first question about the nature of our business in China, and then John can talk to the next 2? I'm not sure how helpful I'll be on the third. Our Chinese business is, I'd say, one data point amongst others for what happened in March. It's not the only data point. And you can look at other markets and come -- at what they do. But I'd say our business in China is relatively media dominated, is very highly digital. But digital media, it's not -- the shift is not as simple as from analog to digital. You saw that in Google's results yesterday and what they said about the outlook. And in many cases, digital can be more impacted, because it's easier to move, than less impacted. We do have a relatively strong CPG business, but we also have a relatively strong automotive business. So I think there's a number of things that are the same about the business in China, the way it operates, and a number of things that are different. And I would to look at it and the other markets to draw your conclusions. I mean John, why don't you add to that and then talk about furloughing?
Yes. So obviously, I understand what's behind your question, trying to see whether the experience that we've seen in China is, in any way, likely to be reflective of what we may see in other economies. And I think the first observation to make would be, there are so many factors at play here. It's very difficult to draw too many conclusions from performance in any individual one country. But what I would say is that if you look at China, clearly, we saw an impact of 25% to 30% or so in March, and we've now seen substantive recovery from that position coming through in April. If you also look at what's happened in Western Europe, which, on average, has been impacted for about 2 months of March. In the main, we've seen a circa 10% to 15% impact on our net sales across Europe for 2 weeks or half the impact of the month. So if you sort of used very simple math and extrapolated that up to a full month, you might say that doesn't look dissimilar to the experience that we've seen in China for the month of March. What's important to highlight, though, is again, there are quite big discrepancies between some of these European markets. So if you look at a market like Spain, we've actually seen reasonably robust performance, which just goes to show that it is quite variable across different markets. So those are the facts as we see them today. Therefore, I guess, it's up to you to then decide taking those facts, what assertions you'd make as to what we're likely to see happening across Q2. If you looked at Italy, as another example, which was closed down for most of March, we saw a downturn of 24%. So you can sort of see the math sort of broadly working out in terms of the impact that COVID-19 may have on markets overall. And generally speaking, we've seen that impact last for a couple of months, 2 to 3 months or so. So again, you can draw your own conclusions as to therefore what you see might happen through in Q2. I think the biggest uncertainty for me is then what's going to happen in Q3 and Q4, and that's where it's very difficult to say. Obviously, some of the observers would say we might expect to see a bounce back as we have seen in China. But really, there are so many complex economic effects and dynamics at play, and I think to try and call out Q3 and Q4 performance at this stage would be premature. That said, we have seen -- we have evidence to some degree of recovery in China. So again, you can draw your own conclusions from that. So I think -- I'm trying to reflect back to you what the actual facts and the data are, and then you obviously would then need to, for your modeling purposes, try and interpret those and extrapolate forward. But clearly, it's a difficult exercise given the uncertainty within which we operate. I think in relation...
Just -- sorry, just to clarify I didn't mishear something. So you -- did you say there was a substantive recovery in April in China?
We are seeing -- as Mark has already highlighted in his slides, we have seen quite a sharp recovery in relation to the economy in China. I don't want to get drawn on specifics of WPP net sales, but you've seen through Mark's slide that the economy clearly has got back to work. Now again, you need to be cautious here because there are some countries where economies started to relax restrictions and have seen an increasing rise in cases. And so -- there's been debate in the press this morning around Germany and its potential to go into a further lockdown. So I think we need to be cautious, but we have seen a return to economic activity and a fairly rapid return in China over the last few weeks or so. As I said, I'm not going to get drawn on the specifics of WPP net sales, and we don't want to have to sort of start reporting on a monthly basis. But there are, nonetheless, some encouraging signs from an economic perspective. And in relation to your question on furlough schemes, it's our intention -- we're not, at this point in time, intending to take advantage of the U.K. scheme. That's not something that we plan to do. We are using furlough schemes in other geographies to some extent, so Spain and Italy as examples, but obviously, with our key market being -- one of our key markets being the U.K., we're not intending to use the scheme in the U.K. We have got a lot of flexibility around other cost savings. We're looking at 4-day working week. We've got the salary sacrifice. And indeed, in a few areas, we've gone towards permanent headcount. So that gives us a range of cost-saving opportunities that enables us to take costs out rapidly, but also be able to respond very quickly as and when the market returns. And an example, a good mechanism for that is the use of 4-day week. Obviously, you take the cost out pretty quickly. But if we need to step that up immediately when -- as and when the growth returns, we're able to do so. So we've got really a very flexible cost base, which will allow us to face into whatever economic scenario the market throws back at us.
Our next question comes from the line of Lisa Yang from Goldman Sachs.
So I appreciate, there's a very lack of visibility, especially in the second half, but you did mention your model the numbers, economic scenarios and your detailed cost action. Just wondering, like, John, if you can share with us what the scenarios are, like maybe what's the worst case versus best case. And out of all the cost-saving measures you've just talked about, like where do you see the most flex -- where do you see the most flexibility for this year? The second question is on the U.S. I thought it was quite helpful you gave the impact of COVID in Europe in the last 2 weeks. Could you maybe share the same information for the U.S.? I was actually quite surprised to see U.S. was only down 4% in March. So I'm just wondering whether it is due to the timing of cancellations or the turnaround that has been happening for WPP just progressing better than expected. And the last question is, in this environment, we're seeing more emphasis on budgets shifting to digital media and e-commerce. I'm just wondering, like, how do you guys think this will do to in-housing? Like, have you seen more or less in-housing recently? And what do you think will happen going forward? And how the WPP is positioned to capture the opportunity from that shift?
Okay. So why don't I start with the in-housing question, then John can take the first 2 questions. Look, I think that one thing I'd say in our relationship with our clients is they're much closer, I'd say, than they were 3 months ago. And I think others have made the same observation. And I think we're talking to CMOs and CSOs and indeed CFOs of our clients in a much closer way in helping them plan what they're doing. I think clients realize the importance of the work that we do and the judgment that we have about the mood of people, the tone of the conversation and the way in which they communicate. And I also think they recognize the value, the stronger value of a creative idea than the not-so-creative idea, I mean, there's been some parodies made of some of the client responses to COVID, and I have to think that, yes, it's a careful balance between seeing to help people and doing the right thing. So I think there is a value, to my mind, in having an external agency advise clients on their marketing. At the same time, we are working faster and closer and more quickly. And I think that the fact that we're working remotely has made, quite frankly, a lot of that easier. We're jumping on video calls rather than going to meetings. We're having daily updates rather than waiting a week, and the situation is so fluid that it's forcing us to work more quickly. And I think a large amount of that work will continue. And my final observation would be that I think a number of clients, and we have had 1 or 2 discussions with clients that have in-house agencies with the fixed costs attached with them, can see the benefit of having an agency partner with variable costs. So I think that it's a spectrum. And I think in a number of cases, we actually had conversations about bringing in-house agencies back into WPP. So I don't think it's heading in one direction. And I think, if anything, clients, when they will work through this, will see the value in having an independent, an expert partner and working with them, the flexibility in terms of the arrangements and the costs that, that gives them, but also the access to expertise. I mean one of the things we've been spending most of our time with has been sharing examples and case studies of work we've seen in other parts of the world, in other regions, in other clients with our clients. And the ability to give clients an insight into what's going on all over the world in other sectors, I think, is something that, an in-house agency is, by definition, incapable of doing. So I remain confident about the structure of our business. There's no doubt that we'll work faster and in a more agile way. We have made a lot of steps in that direction, but I remain positive. So John, please take Lisa's other questions.
Yes. Thanks, Mark. So in terms of the economic scenarios that we've modeled, we've -- as I said -- as we've said, we've modeled the range from the most optimistic being a flat sales scenario for the year, which I think you can all see is unlikely to happen, all the way to the other end of the spectrum, which is a negative impact on net sales of between 35% and 40% for the full remainder, the 9 months of the remainder of this financial year. So as you can see, a fair range from very optimistic to very pessimistic. So those are scenarios that we've modeled. And against each of those key scenarios, we've identified cost savings that we would take out under all these different scenarios and have established various triggers in the business so that we have early warning indicators as to when we would start to take those costs out. So very clear on that, against all that range of scenarios. And against all of those scenarios, we have sufficient liquidity to run the business, and we're comfortable against our banking covenants. And so we've done a lot of work planning for the unknown, frankly, because we don't have a clear view as to what will happen over the 9 months ahead. But we are very clear we have a view as to what we would do and how we would respond in all of these different scenarios. So that -- hopefully, that answers your question there. In terms of the mix of the costs that we would take out, we've already taken immediate action 4 or 5 weeks ago to -- on the things like the salary freezing, salary sacrifices of the Board, discretionary spend, et cetera, et cetera. And that's already -- we already delivered savings of GBP 700 million to GBP 800 million in our numbers. In terms of the other levers that we are looking at pulling and are in the process of implementing, the part-time working, salary sacrifice across the broader community, permanent headcount reductions, again, depending on the scenario that we've mapped, will depend on the mixture of costs that we take out. But as Mark said earlier on in the call, we've always taken the view that we want to protect our colleagues as much as possible, not only because it's the right thing to do, but also because, from a client perspective, we want to make sure that we've got the resource and the capability within the business as and when the market returns. And so in terms of the biggest leap, we've identified the salary sacrifice across 3,000-plus colleagues. I don't think we can do much more in that area. I think the biggest lever for us will be looking at part-time working, say, moving colleagues to either a 3- or a 4-day working week. And this gives us maximum flexibility, both in terms of taking the cost out and taking the cost out quickly, but also we -- initiating that cost back in as and when markets do recover. So I think we can build that flexibility into our plan. And then in relation to permanent headcount reduction, there clearly will be some parts of our business that will decline significantly and where we will need to take out headcount on a permanent basis. And again, we're making sure, as an organization, we're facing those decisions now and not waiting to take those decisions. So hopefully, that gives you a little bit of a feel into the playbook that we have in operations to take cost out. In relation to your question on U.S. performance, I think we were encouraged by the performance in the U.S. market in the first quarter. I do think it's a reflection of the actions that we've taken in bringing the agencies together. I do think it's a reflection of starting to see a degree of recovery for our business in that market. And dare I say it, I think it's -- obviously, we felt that we were on that road to recovery. And obviously now things have very much changed because of the impact of COVID-19, but we saw very good performance in the U.S. from VMLY&R and Grey and GroupM, all of whom grew in the last quarter. So I think we are quite encouraged by the underlying performance in that geography notwithstanding, of course, the impact of COVID-19.
That was really helpful. Can I just have a very quick follow-up on your -- the economic scenarios? Like, do you think even in the worst-case scenario, you could maintain the sort of operational drop-through we traditionally see of about, like maybe 25%, 30%? And I guess, once the economy recovers next year, like, is it fair to assume the operational leverage will be way higher than that basically on the way up?
Look, I'm not going to comment too much or get drawn on the details of the drop-through. I don't think from what you're saying there's actually that's indicatively right. But what I would say is we have that ability, as I've already highlighted, through part-time working to take the cost out quickly if we need to, but also put that resource back in play if the market recovers, if and when the market recovers. So in that sense, that enables us to protect the drop-through or the impact on the net sales -- the decline in net sales has on the overall operating margin of the business.
Our next question comes from the line of Julien Roch from Barclays.
Yes. Two follow-up. On the cost, it seems the GBP 700 million to GBP 800 million is not a hard number, but depending on the revenue. And you gave us a very wide range of flat to minus 40% for the last 9 months. But can you help us on thinking about a cost saving range? So -- I don't know, maybe a level of savings at minus 5%, minus 10%, minus 15% organic, or the highest or the lowest number? That's my first question. Then the second question is on different world, big price in terms of efficiency. I know you don't want to give a number, but should we think about potentially having higher margin in a couple of years or you rather have a higher revenue growth and invest in talent, in pricing with clients to have a faster top line and not increase margin?
I mean John, why don't you...
Yes. I’ll have it. I think -- look, first and foremost, in relation to cost savings, the actions we've already taken have already, in effect, implemented cost savings of GBP 700 million to GBP 800 million. So those actions are already embedded in our business. In terms of giving you a range above and beyond that, against different scenarios, I don't want to get drawn in all that detail, but as I've already indicated, we've mapped out some fairly aggressive downside scenarios purely for scenario planning purposes, and against some of those scenarios, we've identified significant costs that we would need to take out of the business against those scenarios. And that's what gives me comfort that we've got sufficient liquidity, we don't breach our banking covenants, and equally, we can respond to our clients if and when the market recovers. But I don't want to get drawn into giving you all of those cost savings against the expected different scenarios. It's safe to say that we've done all that work, and we're confident we can take cost out should we need to. But just to be clear, the GBP 700 million to GBP 800 million that we announced 3 to 4 weeks ago, those actions have been taken and are already effectively embedded into our business. In terms of the pricing -- future pricing efficiency, and does that mean we have a higher margin in the future or higher revenue growth? I don't think, again, we would want to get drawn on that too much today. We know for sure that the whole -- the world is going to be a different place as we emerge from COVID-19, and the nature of our business will equally change as a consequence and where we decide to invest and how we decide to invest. And we need to think through those plans over time. So I wouldn't want to, at this point, get drawn on whether we saw that going into margin or whether we saw that going into growth. Of course, in all likelihood, it's going to be a combination of the 2 and a balance of the 2. So if we think we can deliver higher savings, clearly, we'd want to be able to invest some of that savings back into our clients, back into better serving our clients. But as to how we would look to work through that, I think we will leave that for a later date. What I would say is I do think there's opportunity there, and that's the real message to take away. I do think there's an opportunity to take out costs. It's not a trivial exercise. WPP is a complex business, a very disaggregated business, both by geography, by operating company and by clients. So it's not always easy to be able to take the cost out, but there's clearly opportunity there. We're in the process of sizing that opportunity, and we'll come back to you when we're ready and talk that through in a little bit more detail as to where we see those pockets of opportunity and the time frame over which we think we can deliver them. But that will be for a later date. Hopefully, that's helpful.
Yes. And I think, John, to add to what you're saying on the margin versus growth question is what -- it is what we started to lay out in December 2018 as part of the new strategy. I think the target remains to get back to the 15%. Clearly, the time frame over which we need to do that, it's going to be -- we need to look at. But I think we need to prioritize margin. We need to prioritize margin over growth in the right way. And I think that, historically, perhaps you got the balance wrong. But we need to get that balance right.
And our next question comes from the line of Tom -- we have Adrien de Saint Hilaire.
I've got a few, please, if that's okay. First of all, compared to some of your peers, I think you're overweight towards the CPG category, which, as you said, is less cyclical. I just have 2 questions here. Why are we not seeing this in your overall, let's say, group number? And perhaps then second question, should you then expect to outperform the competition on the way up?Second question, you talked about a recovery in economic activity in China. But more broadly, what is normally the lag that you would expect between GDP growth and economic growth and your own fees?And thirdly, there were some press commentary recently that Google was looking to reduce marketing spending into the second half. Just curious, more broadly, what do you think the risk is that we have not yet seen the most and the majority of marketing cuts playing out in your numbers?
So I think, maybe I'll start, and John can add to them. I think on Consumer Packaged Goods, there are large number of moving parts, and I don't think you can draw one thing or another. I think that, clearly, CPG, technology, health and pharma have been relatively more resilient. But as you're well aware, Adrien, we may have a higher CPG share. Other companies have a higher health care share. So I don't think one can draw the negative implication, a negative implication from that, I mean, they have to look at that. On China, the question about GDP and our fees, I think that, that, again, I think that's a very complex relationship. And I don't think that we can give you a sort of equation to relate the 2 things. I think if you look back at '08 and '09, perhaps the link was slower. But I think the nature of the crisis that we're in at the moment is that everything has happened more quickly, and therefore, the timing link is much more uncertain. And I think it's uncertain in terms of how we come out the other side and depends a lot about how clients have visibility into recovery and how they plan. I think we can say from our experience in China that things do bounce back or do recover quite quickly. Albeit in China, we haven't yet seen them come back to previous levels. And on the third question, I didn't see the commentary on Google and they're a client, and we're not going to comment on Google's plans. You'd need to ask them that question. And I think we have said that we expect the second quarter to be tough and there's considerable uncertainty about the outlook for the third and fourth quarter, and I'm not sure we can add more to that at the moment.
Can I just ask... Sorry.
Maybe just to add on that a little bit in terms of the China question. And as Mark said, I think it is very complex. But again, it sort of depends on the nature of the work. So if you think -- an example of that is some of our PR work, we've seen that be relatively robust, actually, over the impact of COVID-19, whereas perhaps some of our more project-related work tends to go away very quickly and then come back very quickly when the market recovers, whereas perhaps the more creative side tends to be less volatile. And then you have the media spend, which sits somewhere in between the 2. So again, that's the -- it's both complex by geography and both complex by the nature of the service that we're providing to our clients as to the speed with which each of those either falls away or comes back when the market recovers.
Actually, maybe, Mark, I have a quick follow-up on my point about correlation with GDP. Would you say that your business today correlates more or less versus the broader media and advertising market compared to the previous recession?
Well, I think that the level of commission versus fee in our business has clearly -- the level of commission has declined and the level of fee has increased. So I'd say we're less correlated directly to advertising spend, but that doesn't mean that our fees are not also correlated to advertising spend, and it is correlated to activity in the business. I think there's also -- there's a number of parts of our business -- if you take e-commerce, if you take marketing technology, I mean, as we're talking to a client earlier this week that's a retailer and they're under some financial pressure, but they just signed off a major marketing technology investment program because they're convinced of the importance of putting this in place. So I think you are seeing clients sort of invest in the long term, and I don't think there's a straightforward -- there's really not a straightforward correlation, I could say, to that things that are more or less correlated. I think that you can see in our results that no sector or no company in the economy is not going to be impacted by this, and we tried to give you as much disclosure as we can in terms of what we've seen by sector and what we've seen by country both in a single month to give you as much sense of what's going on. And I think you should look at that and see what correlations you can draw between those marketing numbers and the GDP in those countries. I think that might be a helpful thing for you to look at.
Our next question comes from the line of Tom Singlehurst.
It's Tom here from Citi. A couple, actually. First one, there has been some -- well, there have been some reports from bodies like the IAB that the current environment is driving a sort of shift in emphasis away from performance marketing back towards sort of brand and mission-related marketing, which -- I mean, firstly, have you seen something similar? And does that have any consequences for the relative growth rate of creative versus media? That was the first question. And the second question is on the advertising -- the competitive landscape and the outlook there. I mean I think Lisa asked about in-housing and noticed a couple of sort of big in-house sort of creative mandate sort of going back out house again like Allstate. But I mean, just vis-à-vis smaller ad agencies and smaller ad agency groups, is this relatively easier for them to adapt to or relatively more challenging? And what do you think about the potential for consolidation longer term on the back of what's happening to the sort of smaller-scale competitors?
Yes. I think that -- thinking about the comment you made about the IAB, there's been a shift from performance to brand. I wouldn't say -- I wouldn't look at it like that. I'd say that clients are focused on driving ROI. Depending on the client situation, there are different ways of driving that ROI. If a client has something relevant to say to its customers about purpose or about brand, I think this is a good time for them to communicate it, and they would do that through brand channels. I think at the same time, if there are clients who are able to sell online, then they will shift -- they will spend money behind performance media. And there are a number of clients who are not able to sell online, who are not able to trade at all, but who will clearly cut their spend. So you saw in the comments about Expedia and Booking.com on what they're spending on digital media. So I think you are seeing within performance media the divergence by sector. And I think, again, within the brand media, you're seeing a divergence. So I don't think it's so straightforward to say that clients should continue to spend through downturns, but I do think that there are clients that can drive ROI by communicating at the moment. And I think you have seen some companies take advantage of their competitors being silent to spend. I think those companies that can drive sales will invest. And as we've said, given all of the innovation going in the world, if I were a client, I will be trying to figure out what's going on, how consumers are behaving, how they will respond and trying every innovation possible to figure out when things come back, how can I benefit from the upturn. So that's how I think about the shift in media. From a competitive perspective, I think there will be a premium in the future -- I mean, in society, in general, on resilience. There's been a lot of coverage in the press about leverage, about optimization, about efficiency and about building stronger buffers and stronger stocks, a bit like we had, if you think about it, during the financial crisis. And I'd say, one of the -- WPP is fortunate in some respects going into this that most of our clients are large and well-capitalized companies, and that they will come out the other side of this in a stronger position. So I think that there is a premium on resilience, financial resilience and operational resilience, and to some extent that, that comes with size, and the smaller companies can be more challenged. And I'm sure, just as in previous downturns, we had a clear degree of consolidation amongst the smaller companies. We may see a degree of consolidation amongst the smaller companies in this one, and I wouldn't like to comment on that further.
Our next question comes from the line of Matthew Walker from Crédit Suisse.
Just really following up on some of the previous questions, to be honest. The first one is on China. You talked about a substantive recovery in April. I guess, the avoidance of doubt, I wasn't entirely clear, but I could have missed something. Does that mean that April is less negative than March? Or does it mean that it was up year-on-year? And if it was, is that related to pent-up demand, stuff like the auto sales, et cetera? If you could just be a little bit clearer around that.And then the second question is back on the working capital. You highlighted that some of the weaker sectors that ask for extension of payment terms, but a lot of the trade press has been talking about even quite powerful companies, who are not in the vulnerable category, making demands for a quite significantly extended payment term. So the ambition to get better on working capital year-on-year is great and notable, and you have done it in Q1. So could you just explain the disconnect there or the apparent disconnect there because there does seem to be one based on many different trade press surveys, which, I guess, could be wrong. But maybe interesting to know what you're doing definitely or why you're so confident.
Okay. Well, I think -- I mean, we've given pretty extensive commentary on China. So I think to clarify the point, I think we'd say a recovery would be less negative. But John could add anything to that if he wants and also talk to you on working capital and what we're seeing from clients.
Yes. No, I think we said it on China already. I think we need to be careful not to get carried away. What we're saying is we've seen a rapid economic recovery, but it hasn't gone back to previous levels. And so that's clearly a less negative as opposed to a positive, and there's still significant uncertainty going forward. So we need to be careful we don't get too carried away. In relation to working capital, we don't -- we haven't sort of shared your observation that we're getting sort of requests for extended payment terms from those businesses that aren't under sort of financial distress and pressure. We just haven't seen that in our business. Now that may occur over time, but I think we've done a sensible job of holding the line and being firm in relation to our payment terms where we need to be, but equally recognizing where we can support our clients being appropriately flexible. But I don't recognize the broader trend that you were calling out. We certainly have seen -- we have had some requests in from some of our clients, and they will be in the obvious sectors, and the obvious clients, but not more broadly across the board. And if we were to receive such requests, I think we would defend them relatively robustly unless we saw an underlying need to have to support that particular client.
So I let you answer that question, John, but I didn't remember you saying that we've seen extensions either. So -- right.
Yes. So just to be clear as well, we have the ambition -- in a steady-state world, we have the ambition to improve our working capital position, and there is an underlying opportunity to do so. That's absolutely clear. What is also abundantly clear is we're not in a steady-state world, and so -- and we've deliberately removed guidance for the remainder of this year because of that uncertainty. So I don't want people to sort of say, we have an ambition to improve our underlying working capital position. We have plans in place to absorb stresses in terms of pressure on our working capital. But to be absolutely clear, the next 9 months remains uncertain, and we will have to manage our way through that carefully.
And our final question comes from the line of Richard Eary from UBS.
Firstly, I hope everyone is well. Just sort of one major question for me, which is sort of more qualitative, which is just what you provided today has been great in terms of color. I just wanted to try and actually look at maybe quality coverage on what you're seeing in demand for services and products and whether there's any -- been any sort of surprises, either positive or negative, that's come out in terms of demand for specific sort of services that you offer from the group, so whether that's media, creative, planning, digital. I mean you talked about PR has been probably more defensive, and I appreciate it does vary from clients. But I was just wondering whether you can add any more qualitative color for us.
Yes. I think I'll make a few observations. One is when I talk to our people, I'd say they are busier than ever, and I have that sense across the company. When we sent everyone home, if that's the right term, on March 16, I was concerned about the business' ability to maintain the tempo and the speed of operation with everyone working at this time. And I have to say, while it's not easy for people managing, I have been really impressed. And I've noticed no kind of downturn in the level of activity, and people are happy, busier than they've ever been. And I'm saying that's true in our media businesses, where people have been tremendously busy helping clients shift media commitments into higher ROI channels or moving them around on a year basis or looking at extending terms or picking through what they're going to do in sports. I'd say our public relations businesses are probably busier helping clients communicate with their people, communicate with their customers; our e-commerce activities are busier; our production businesses have been extremely busy getting work out, and you saw sort of a collage of the work. And if I think across our top 10 clients, I would say most, if not all of those clients, have launched some kind of new brand campaign or purpose-driven brand campaign on television in the last 6 weeks at record speed to talk to their customers about what they're doing. Our production business has been extremely busy in Hogarth. It's been a very valuable asset for us, both in its ability to use technology and to operate around the world. And we can now make commercials in China, for example, that we can use in other markets. That shows the value of having a global capability. Interestingly, our brand identity agencies are the very project-driven -- we've seen actually clients come to us, and say, we actually have some time on our hands at the moment. We'd like to tackle that big brand question that we haven't tackled so far. So we will do this. And so it's really interesting. In our shopper marketing businesses, they're seeing promotions canceled that they're doing at the moment, but then we have other clients thinking about promotions for the fall if they have quite long lead times. So I'm not trying to say that our revenue is not impacted, and clearly, our revenue is impacted and the overall level of revenue is impacted. But I think the people are busy, and it's really a matter of change of emphasis from the stages of [ you urge the question ], you're planning what you can do, your sustaining activity, then you're planning for how you come out the other side. So I think that, that -- and then the last comment I'd make is the high degree of collaboration that we've seen across WPP. And one of our goals is to ensure that WPP operates as a company, with a strong WPP, but also with a strong AKQA, a strong Ogilvy, a strong MediaCom, a strong Mindshare. I think we are seeing that. And our executive committee, we met in India just before sort of the world locked down, and we had time both to meet together as a group and plan our response. We had Professor Piot, who's the scientist that discovered Ebola, talk to us about coronavirus, and I think this was very early in March. So we had a good sense, I think, of what was about to happen, and I think that has helped us plan our response. And I think having that group of people work together as a team has made our response much more effective and much more coordinated. And using the technology to be in touch with clients, and it's actually remarkably efficient and remarkably effective. So I think, as I said, I've been very impressed by the way the company has operated, our people have stepped up, and the quality of our creative work has not suffered. If anything, we've seen some fantastic creative work take place at the moment. And also, we're in constant touch with our partners. I was on the phone last week with the CEOs of 2 or 3 of our major technology partners, talking about ways in which we can work with them, ways which we can approach clients jointly with opportunities, thinking through how they respond to the e-commerce channel, which is much, much higher on the agenda of all of our clients at the moment. So I think there's a lot of -- I don't want to use the word opportunity because it feels like the wrong word to use, but it's a really good time to double down and lean into the strategy that we developed, and that's very much what we intend to do.
Can I just -- could I simplify that and say that, do you -- would you think that when you were going in...
I gave the wrong answer.
Yes. No, no, no. I was just wondering that -- if you look back a bit from today from where you were sitting sort of a month ago, would you say that the business has been more defensive than you thought? And that's a good thing. Admittedly, it does vary by sectors...
Yes. I think you're trying to draw me into financial conclusions that I think we've covered at length on this call. So I wouldn't want to add to that in a way to confuse them. I'd say that the business is operated very effectively, and I think that it's -- I'm more persuaded that what we do is valuable to our clients, and that there are going to be bigger opportunities when we come out of this to help clients navigate and innovate and connect with consumers in new ways. I think that's what I would say.
That was the final question, sir. Please continue.
Okay. Thanks very much, everyone. I think Richard's question enabled us really to summarize how we see the situation pretty clearly. So thank you all for listening. And John, myself, Peregrine, Fran and others are available to take questions. So thank you all.
Thank you. That does conclude today's conference. Thank you to everyone who's participated in today's call. You may now all disconnect.