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TOP NEWS: WPP cuts outlook as US tech customers keep lid on spending

4th Aug 2023 08:14

(Alliance News) - WPP PLC on Friday cut its yearly guidance, as the advertising company's second-quarter was hurt by weaker spend in its US technology clients.

Shares in the company traded 6.9% lower at 789.00 pence each in London on Friday morning.

The company reported first-half revenue of GBP7.22 million, up 6.9% from GBP6.76 billion a year prior. Pretax profit, however, slumped 51% to GBP204.3 million from GBP418.6 million. WPP reported finance costs of GBP230.7 million, a 59% rise from GBP144.9 million.

Second-quarter revenue alone grew at a slower pace of 2.7% to GBP3.76 billion.

"Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects. This was felt primarily in our integrated creative agencies. China returned to growth in the second quarter albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year," Chief Executive Mark Read said.

Away from the US tech slowdown, Read noted the company win deals with consumer goods firm Reckitt Benckiser Group PLC, budget airline easyJet PLC and Lloyds Banking Group PLC.

"We have exciting future plans in AI that build on our acquisition of Satalia in 2021 and our use of AI across WPP. We are leveraging our efforts with partnerships with the leading players including Adobe, Google, IBM, Microsoft, Nvidia and OpenAI. We are delivering work powered by AI for many clients including Nestle, Nike and Mondelez. AI will be fundamental to WPP's future success and we are committed to embracing it to drive long-term growth and value," Read added.

WPP now expects like-for-like revenue growth, less pass-through costs, of 1.5% to 3.0% for 2023, its guidance cut from a range of 3% to 5%. Its headline operating margin target of "around 15%" was maintained, however. Its headline operating profit margin in 2022 had climbed to 14.8% from 14.4%.

WPP maintained its interim dividend at 15.0 pence per share.

By Eric Cunha, Alliance News news editor

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