WPP Shares Tumble On Weak Q3 Earnings
WPP shares tumbled Thursday 16% in mid-morning trading on the London Stock Exchange after the firm released a weak third-quarter earnings report that revealed an organic net sales decline of 1.5% for the period, well below market expectations.
The company also revised full-year guidance indicating that an organic sales decline is likely of between 0.5% and 1%.
It was the latest setback for the holding company, which has suffered a string of recent account losses, including the Ford creative account and media assignments for American Express and United Airlines. However, the company reported net new business of $4 billion through the first nine months of the year.
CEO Mark Read confirmed that the company was exploring a sale of research arm Kantar (likely holding on to a minority position) and that the company had received “unsolicited offers” for the unit.
Also, the company’s long time Group Finance Director Paul Richardson is retiring sometime in 2019 after a transition.
“Turning around WPP requires decisive action and radical thinking, and our performance in the third quarter of 2018 reinforces our belief in that approach,” Read commented.
“The slowdown primarily reflects a further weakening of the performance of our businesses in North America and in our creative agencies, issues that we highlighted in our interim results.”
Third-quarter reported revenue was down 0.8% to £3.758 billion (about $4.7 billion), partly impacted by currency fluctuations.
For the first nine months, the organic sales decline was 0.3%, while reported revenues were up 1.1% to £11.2 billion ($14.4 billion).
“WPP has grown into a large and complex organization, with many strengths, but also challenges,” said Read. “It will take time to improve our performance and we are realistic about the short-term issues that we face.”
The company has been conducting a strategic review, and Read said a strategy update would be provided in December.
Credit: Media Post