Wed, 14th Nov 2018
Shares in WPP fell by more than 20 percent during early trading on Thursday, as investors were left stunned following a disappointing trading update. The company has slashed its full-year guidance, and is struggling to get back on track after its founder and chief exec, Sir Martin Sorrell, departed the advertising group in April.
WPP had been expected to report growth of 0.3 percent for sales over the third quarter. Instead, they reported a fall of 1.5 percent. The news saw shares in the group fall to their lowest level since 2012, with WPP’s market value falling by almost £3 billion. Last week, WPP lost its title of ‘most valuable advertising group’ to Omnicom, a rival based in the US.
WPP shares did rally towards the end of Thursday’s trading, but the day ended with shares sill down by almost 14 percent. The company cut its guidance for full year net sales, warning investors that they could fall by up to 1 percent. Just three months ago they had told investors that they expected to see sales grow by 0.3 percent.
Citi analyst Thomas Singlehurst observed that WPP had delivered a proper profit warning. The performance at the company is particularly alarming given that all of their major rivals have reported strong growth over the fourth quarter. Incoming chief executive Mark Read acknowledged that the results were a problem, and said that the company had clearly underperformed the competition and that he was not going to sugarcoat that reality. The company is currently looking for a buyer for its Kantar research group, and is selling off businesses to strengthen its balance sheet.