Source: Sharecast
WPP said third-quarter revenue fell 8.4% from the same period a year earlier to £3.3bn, with revenue less pass-through costs down 11.1% to £2.5bn.
For the full year, WPP now expects LFL revenue less pass-through costs to decline by between 5.5% and 6%, versus previous guidance for a drop of 3% to 5%. In addition, headline operating profit margin is expected to be around 13%, versus previous guidance of down 50 to 175 basis points year-on-year excluding the impact of FX.
The company’s guidance for adjusted operating cash flow pre working capital was unchanged at £1.1bn to £1.2bn.
WPP said it has initiated a strategic review, with a focus on returning to growth and strengthening execution.
New chief executive Cindy Rose acknowledged that the company’s recent performance had been "unacceptable" and said it was taking action to address this. "We have strong foundations and the ingredients needed to succeed,” she said.
"We have amazing long-standing clients that represent the largest, most well-known brands in the world, strong capabilities and world-class talent that spans media, production and creative, some of the most consequential agency brands in the market, unrivalled global scale and reach, and market-leading technology and technology partnerships that give us a real competitive edge. This is an exciting platform to build on.
"To deliver performance improvements, we will position our offering to be much simpler, more integrated, powered by data and AI, efficiently priced and designed to deliver growth and business outcomes for our clients. We will significantly improve our execution, strengthening our go-to-market and dramatically simplifying how we organise ourselves internally, as well as building a high-performance team culture.
"We will expand our addressable market by pushing harder into enterprise and technology solutions. And finally, we will take a disciplined approach to capital allocation with a focus on cost efficiency and maintaining a strong balance sheet while prioritising the parts of our business where we can deliver the greatest shareholder value."
At 1200 GMT, the shares were down 14% at 310p.
Russ Mould, investment director at AJ Bell, said: "It’s rare to see a trading statement where the CEO calls out performance as unacceptable, but that’s perhaps the luxury afforded a new boss who can say it didn’t happen on their watch, and wants to grasp the opportunity to set out a new strategic direction.
"Cindy Rose pulled no punches in her assessment of WPP’s numbers, and tried to guide the market towards a strategic review and the potential for a rosier future. The market’s verdict concurred the figures were unacceptable and promptly marked the share price down by 10%, taking it to a place where it has fallen by 60% this year, putting WPP in real danger of losing its spot in the FTSE 100.
"The previous CEO Mark Read failed to reposition WPP in the face of structural changes to the advertising industry. The rise of artificial intelligence and social media networks have meant that big clients have less of a need to use agencies such as WPP. The firm’s culture is rooted in traditional advertising and the world has gone digital, leaving the company scrambling to play catch-up. Cindy Rose has a big job on her hands, but it looks like investors aren’t prepared to play wait and see any more."
