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WPP, the London-based advertising agency searching for a new chief executive, has slashed its forecast for revenues and profits this year, blaming a “challenging economic backdrop”.
The group said on Wednesday that like-for-like revenue in 2025 when removing pass-through costs — the fees paid to external suppliers — would decline by 3-5 per cent after poor trading in the first half of the year.
This marks a sharp downgrade from its previous expectations 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 has failed to materialise.
Shares in the company fell 14 per cent in early trading on Wednesday.
WPP said that macro economic 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.
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 said.
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 starts the search for a successor, added that the group’s performance in June was worse than anticipated and it expected “this pattern of trading in the first half to continue into the second half”.
The numbers again mark the extent of 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 market capitalisation to about £5bn.
WPP is underperforming compared with some of its rival global advertising agencies such as Publicis, but has sought to invest more in AI tools as well as services to clients based on data and technology to deliver advertising campaigns cheaper, faster and more targeted towards individual consumers.
