WPP Says Weaker Spending Hindered Growth

WPP says despite "challenging top line growth opportunities and uncertainties," operating profits were well ahead of budget and ahead of last year.

The UK-based holding company reported that like-for-like sales, similar to organic growth, grew 0.8% during Q1 2017 with reported revenue rising 16.9% to £3.597 billion, lifted by favorable currency translation. Like-for-like revenue was up 0.2%, while reported billings were up 9.2% to £13.017 billion.

The UK and Western Continental Europe were the strongest performers. Asia-Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe were stable, while North America struggled.

On the same basis, public relations and public affairs and branding & identity, healthcare and specialist communications - including digital, eCommerce & shopper marketing -- were the strongest sectors, with advertising and media investment slightly down, following weaker comparative new business trends toward the end of 2016 and a strong comparative last year.



The Group gained a total of $2.103 billion in net new business wins (including all losses) in the first quarter, up from $1.779 billion in the same period last year. Of this, J. Walter Thompson Company, Ogilvy & Mather, Y&R and Grey generated net new business billings of $519 million.

WPP completed 14 transactions in the first quarter; seven acquisitions and investments were in new markets and 10 in quantitative and digital and 1 were driven by individual client or agency needs. Out of these transactions, four were in new markets and quantitative and digital.

WPP suffered from some major losses in 2016, including Volkswagen and AT&T. Furthermore, WPP will likely face added pressure with Unilever, which counts as one of WPP's biggest clients, planning to produce 30% fewer ads going forward and trim its global creative agency roster by 50%.

Given the tepid economic growth prospects and the softer net new business trend late last year, WPP says its outlook for like-for-like revenue and net sales growth for the full-year is projected to grow at around 2%. WPP's stock price was down during early trading reaching 108.91 after previously opening at 110.12.

Looking forward, WPP is expected to ease investor chatter over the fate of what some are calling the "succession elephant." As reported earlier in Bloomberg, Chairman Roberto Quarta has been meeting with investors to discuss succession plans for the 72-year-old Sir Martin Sorrell, the only chief executive officer the company has known, as he eventually departs the scene.

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