WPP Lowers Growth Forecast as Advertisers Cut Spending--Update
WPP PLC shares fell almost 12% in London trading Wednesday after the world's largest advertizing group saw a slowdown in revenue growth in Europe and North America.
The company lowered its full-year growth forecast for 2017, reflecting a wider slowdown in industries such as consumers-goods and retail that WPP has traditionally relied upon for growth. It now expects growth of 0%-1% this year.
WPP said its like-for-like net sales--a measure used to judge the company's underlying performance--declined 0.5% in the second quarter compared with a year earlier, below the expectations of analysts. For July, like-for-like net sales declined 2.6%.
The U.K.-based company, whose agencies include Mindshare and JWT, said profit before interest and tax rose 15% to GBP882 million in the first half ($1.13 billion). Reported revenue rose 13% to GBP7.4 billion for the period, lifted by favorable currency translation to the Brexit-weakened pound.
Despite the slowdown in revenue growth, the group reiterated its target for a 0.3 point improvement in its operating margin. The company also raised its dividend to 22.7 pence from GBP19.55 pence in the first half.
Run by Chief Executive Martin Sorrell, WPP's share price has dropped this year with many of its largest clients struggling to boost growth amid a tepid global economy, cutthroat competition and fast-shifting consumer tastes. WPP has already rattled investors in March when it set a 2017 target for net sales growth of just 2%.
"All regions, except the United Kingdom, Latin America and Central and Eastern Europe showed lower revenue than the prior year and all sectors were down, with advertising and media investment management and data investment management the most affected," WPP said.
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.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
August 23, 2017 03:58 ET (07:58 GMT)