WPP PLC (WPP.LN) said revenue growth slowed in the first quarter as clients spent less in the U.S. and emerging markets.
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The world's largest advertising company kept its forecast for slower growth in 2017, reflecting a couple of large account losses and what it called "challenging top line growth opportunities and uncertainties" for its clients.
Like-for-like net sales--a measure used to judge the company's underlying performance--rose 0.8% in the three months to March 31, in line with the analysts' expectations. WPP said that particularly strong sales growth in the same period a year earlier made the latest figures look weaker and growth should accelerate in the second half.
The U.K.-based company, whose agencies include Mindshare and JWT, said Thursday that its net new business billings had accelerated in the first three months of the year, winning $2.1 billion of net new work compared with $1.8 billion in the same period last year.
"It's a soft start to the year and they have a bit of catching up to do," said Kepler Analyst Conor O'Shea. "The big swing factor is the U.S. market, which has been a problem for the whole sector."
Run by Chief Executive Martin Sorrell, WPP has expanded its digital operations and made acquisitions to outpace rivals such as Omnicom Group Inc. (OMC) and Publicis Groupe SA (PUB.FR) as spending for ads in traditional media has slowed in recent years.
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In North America, which accounts for almost 40% of the company's revenue, net sales fell 1.1% on a like-for-like basis. The measure was up 3.7% in the U.K., 4.3% in Western continental Europe and declined 0.1% in emerging markets.
North America was "challenged" as the company's top 20 clients have all struggled to boost growth in a tepid global economy, cutthroat competition and fast-shifting consumer tastes, Mr. Sorrell said.
Competitors Omnicom, Publicis and Havas SA (HAV.FR) have also reported weaker numbers in the U.S. for the first quarter.
WPP said operating profit for the period was well above budget and ahead of last year. Reported revenue rose 17% to 3.6 billion pounds ($4.64 billion), lifted by favorable currency translation.
The company repeated that it is budgeting for around 2% growth in both revenue and net sales for 2017.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
April 27, 2017 03:47 ET (07:47 GMT)