Shares in ad giant WPP tumble as it warns on outlook

Ivan Schwartz
August 23, 2017

WPP, the world's largest advertising group, cut its full-year sales target on Wednesday after consumer goods giants slashed their spending, forcing it to miss half-year targets and sending its shares tumbling.

WPP, which also works for brands such as Ford and Marks & Spencer, had already seen its shares fall 12 per cent this year through Tuesday amid the hard economic climate and pressure on its businesses in North America.

He also warned of the "cancer" of uncertainty around Brexit - though the company's United Kingdom arm outperformed the rest of the group in WPP's interim results, with sales growth accelerating.

Pre-tax profit rose more than 52 per cent to £779m in the period.

The sharp slowdown in growth means the advertising giant is now on track to record its worst year since the 2009 recession, when the group's annual growth fell 8.1%.

However, the group cut forecasts for revenues and net sales to between zero and 1 percent after a weak second quarter.

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WPP said the decline had worsened in July with a fall of 2.6% compared to the same month previous year.

In the second quarter, WPP's like-for-like net sales fell 0.5 per cent with July declining 2.6 per cent, and North America and Western Continental Europe were the poorest performing regions. CEO Martin Sorrell said that 2018 is "unlikely to be much different".

"Trumponomics may well have resulted in an increase in the United States GDP growth rate ...the limitations of the new administration seem to be jeopardising the anti-regulatory, infrastructure and tax reduction programme that was promised", he said.

Sir Martin said the weakest performing region was the United States, while among sectors, consumer goods clients were being squeezed under pressure from activist investors to cut costs.

The company said the cyberattack on June 27 that crippled computer systems at some of its agencies including GroupM and Y&R Group did not cause a significant loss in revenue and could not be blamed for the weaker performance in June and July.

Other reports by GizPress

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