WPP reported a net organic revenue decline of 0.6% for the third quarter, which it said was below expectations and prompting it to reduce its full year organic growth estimate to between 0.5% and 1%. That’s a further reduction from August when the firm cut its growth outlook to between 1.5% and 3%. It started off the year with guidance of 3% to 5%.
Reported net revenue for the period was 2.837 billion GBP, down 5% on a reported basis.
Organic growth through the first nine months of the year is 1.2%. Net revenues for that period totaled 8.649 billion GBP, up 1.8% on a reported basis.
The company cited continuing softness in the technology sector — with media arm GroupM being particularly impacted over the summer compared to the first half. Growth was slower in China as well, where last week a company employee (now terminated) was arrested in connection with a bribery scheme. WPP said it was investigating internally and cooperating with a separate probe by Chinese authorities.
GroupM grew 1.6% in Q3 and 4.6% for the first nine months, with low-single digit growth in the US and UK. Growth at the firm’s global creative agencies was lower in both periods.
The company reported $1.4 billion (estimated annualized billings) in net new business won in Q3, including from Estée Lauder, Hyatt, Lenovo, Nestlé, Unilever and Verizon. For the first nine months the company has won $3.4 billion in net new business.
The company said that some streamlining moves at GroupM and the recently announced merger of Wunderman Thompson and VMLY&R (creating a new and bigger VML) would result in cost savings of over 100 million GPB in the next two years and also boost revenue growth.
“In a world being rapidly reshaped, we need to continue to evolve our offer to clients and simplify our business,” said WPP CEO Mark Read. “I am excited by the creation of the world’s largest creative agency, VML, and the continued evolution of GroupM. Both these developments will strengthen our offer to clients, simplify the integration of our services and maximize the returns on our ongoing investments in AI and technology.”
WPP shares were down about 2% in midday trading after it released its earning report.