Embattled UK media giant WPP has slashed its forecast for revenues and profits this year, sending shares in one of the world’s biggest advertising agencies down by more than 15 per cent on Wednesday morning.
The group said like-for-like revenue in 2025, when removing the fees paid to external suppliers, would decline by three to five per cent after poor trading in the first half of the year.
This marks a downgrade from an already gloomy previous forecast of flat to down 2 per cent for the year. That estimate was based partly on an assumption that new business would pick up through the year, which WPP said had failed to materialise, blaming a “challenging economic backdrop”.
Shares in the group, which is currently seeking a new chief executive, were over 15 per cent lower this morning, with a low of 439p.
WPP, which is based in London but operates a large Northern campus for its constituent agencies on the former Granada Studios site in Manchester, said that macroeconomic conditions had weighed heavily on client spending and that there had been less new business than expected. That would lead to a decline in headline operating profit margin of 50 to 175 basis points for the full year, it added.
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Like-for-like revenue would decline by 4.2 per cent to 4.5 per cent in the second half, following a fall of up to 6 per cent in the second quarter, it added.
Mark Read, the chief executive who announced his departure in June after a 30-year career with the agency, said: “Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business.”
Read, who will continue as chief executive until the end of the year while the board searches for a successor, added that the group’s performance in June was worse than anticipated and that it expected “this pattern of trading in the first half to continue into the second half”.
The numbers emphasise the challenge facing chair Philip Jansen, the former BT chief executive with a record of corporate restructuring and dealmaking, who was appointed last year.
WPP’s share price has fallen by more than half during Read’s tenure as chief executive, taking its current market capitalisation to about £5bn.
