Moody's Investors Service downgraded WPP Plc's long-term rating to Baa3 from Baa2 and reduced the company's backed senior unsecured debt rating from Baa2 to Baa3. Short-term backed commercial paper ratings were lowered to Prime-3 from Prime-2. At the same time, Moody's revised its outlook on WPP to stable from negative.
The rating agency attributed the action to sustained weakness in operating results and higher leverage metrics. Moody's expects WPP's adjusted gross debt to EBITDA to remain roughly in the 4.2x to 4.5x range over the next 12 months. That projection reflects the combined impact of weak earnings and material restructuring charges that are expected to weigh on credit metrics in the near term.
WPP disclosed a 5.4% like-for-like decline in revenue less pass-through costs for 2025, and Moody's noted that the company has trailed its closest peers within its sector. Company management acknowledged that 2026 will be another challenging year, pointing to client losses that continue to pressure revenue performance. Management does not expect a return to meaningful revenue growth prior to 2027.
The ratings agency highlighted execution risks over the next 12 to 18 months as WPP attempts to rebuild client confidence. The company is pursuing a strategic program called Elevate28, which includes a target of \u00a3500 million in cost savings to be delivered over three years, a significant element of the Elevate28 program.
On the liquidity front, Moody's noted that WPP held around \u00a32.7 billion in cash and short-term bank deposits at the end of 2025. The company also has access to an undrawn committed $2.5 billion revolving credit facility that runs until February 2031 and does not include financial covenants.
Moody's rationale for the stable outlook is that it expects a gradual improvement in operating performance beginning in 2027, contingent on successful execution of WPP's strategic transformation and the realization of planned cost savings. However, the agency warned that further downward pressure on the rating could materialize if revenue and operating profit weaken further or if adjusted gross debt to EBITDA remains materially above 4.0x on a sustained basis.
Analyst perspective
From an operational standpoint, the combination of client attrition, the need to execute a sizable cost savings program and the incurrence of restructuring charges present a concentrated set of near-term challenges. Maintaining the reported liquidity buffer and keeping the revolving credit facility available provide financial headroom, but the ratings action underscores market concern over timing and effectiveness of the company's turnaround initiatives.