WPP reports ‘progress’ but advertising businesses remain ‘difficult’

WPP singled out China as showing “significant improvement” in the second quarter of the year as the ad giant reported its first like-for-like quarterly growth since the first three months of 2017.

The interim results, released in London, come just 24 hours after the ad giant confirmed Mark Read as chief executive.

Read painted a mixed picture, outlining progress “in a number of important areas” but expressing concern about under performing operations, “particularly in the US”.

A strategy review was underway, he said.

While reported revenue fell 2.1% to £7,493b, like-for-like revenue climbed 2.4% in the second quarter. Headline profit before interest and tax (PBIT) hit £735m, down 7.4%.

PBIT profit margin slipped 0.5 percentage points to 13.3%.

WPP shares fell 8% of the back of the results which analysts suggested were slightly below expectations.

Overall, the group’s advertising business remained “difficult”. All regions – with the exception Western Continental Europe – saw a slowdown in the second quarter, particularly in North America “where the Group’s major networks remain under pressure”, the company said.

But Read said progress was being made.

“We have accelerated initiatives that will simplify our organisation, making it easier for us to manage and clients to access, with, for example, co-locations opened or announced in New York, Kuala Lumpur, Prague and Toronto,” he told the market.

He continued: “The mix of performance by geography and function and a decision to invest in the growing areas of our business resulted in a slightly lower headline PBIT margin.

“As Chief Executive, my focus will be on invigorating our company and returning the business to stronger, sustainable growth. Our review of strategy is underway, addressing our structure, our underperforming operations, particularly in the United States, and how we position the company for the future. We will provide an update by the year end.”

Read added that WPP had performed well in pitches, winning or growing business with clients including Adidas, Hilton, Mars, Mondelez, Shell and T-Mobile.

In Asia Pacific like-for-like revenue growth climbed from 0.7% in the first quarter to 1.8% in the second quarter.

Mainland China underpinned the performance with revenue climbing 6.6% in the first half, helped by a 9% jump between April and June. WPP said the result was driven by a strong showing in China’s media and data investment management businesses and its brand consulting operations.

Greater China, which includes Hong Kong and Taiwan, saw revenue jump 6.5% in the second quarter, leading to a first half revenue rise of 4.5%.

India struggled by comparison, with first half revenue creeping up 0.9%. Encouragingly, however, the second quarter climbed 1.4% against the 0.3% in the first three months of the year.

Japan also improved, together with South Korea, Malaysia, Pakistan and the Philippines, although Thailand was “slower”, WPP said.


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