Strategic transformation continues to advance. Advertising giant WPP (WPP.US) sees a decline in H1 revenue and profit, but results are better than expected. The stock surged 23% in pre-market trading.

WPP (WPP.US) reported a profit for the first half of the year that exceeded analysts' expectations, primarily due to cost-cutting measures implemented by the advertising company amid a sluggish market environment. The financial report released by WPP on Thursday indicated that operating profit for the period fell by 3.4% to 398 million ($536 million), surpassing the analysts' average expectation of 347.2 million; revenue, excluding pass-through costs, dropped by 5.6% to 4.75 billion, exceeding the analysts' average estimate of 4.65 billion. CEO Cindy Rose, who took office in September last year, has been working to address revenue decline and client losses. In February of this year, Rose unveiled a new strategic plan titled "Elevate28," with the core objective of transforming WPP from a traditional holding structure into a streamlined and efficient single operating company. Rose has implemented a series of streamlining measures, restructuring the company's operations into four divisions: Creative, Media, Production, and Enterprise Solutions, aiming to achieve "accelerated, high-quality" growth by 2028. WPP also plans to achieve annual cost savings of 500 million over the next few years and reinvest the savings into growth areas. As part of its strategic transformation, WPP announced at the beginning of July the expansion of its AI-focused divisionWPP Enterprise Solutions. This division will launch a series of AI-centric business offerings, covering areas such as AI transformation consulting, intelligent agency e-commerce, customer data management, user loyalty operations, and content automation. WPP stated that the company collaborates with clients such as IKEA, Ford, L'Oral, and Nestl, and has established partnerships with tech companies like Adobe, AWS, Alphabet Inc. Class C, and Microsoft Corporation. By business division, in the first half of the year, WPP's Media division saw sales decline by 5.4%, the Creative division (including Enterprise Solutions) experienced a sales decrease of 4.9%, while the Production division reported a sales increase of 1.6%. By region, sales in North America decreased by 6.0%, in Europe, the Middle East, and Africa by 4.3%, in the Asia-Pacific region by 3.8%, and in Latin America by 1.2%. Rose stated in a release on Thursday that the company's performance in the first half of the year met overall expectations, although the loss of existing clients still posed a drag on results. Rose also mentioned, "We are steadily advancing the first phase of the Elevate28 plan to stabilize the business. The goal for the first half of the year is to establish a new organizational structure, which has now been completed." WPP's stock price has fallen by approximately 24% over the past 12 months, and the company was removed from the FTSE 100 index in December last year. On Thursday, pre-market trading saw WPP's stock price surge by 23%.