WPP Revenue Growth Slows as U.S., Emerging Market Clients Spend Less -- Update
April 27 2017 - 4:02AM
Dow Jones News
By Nick Kostov
WPP PLC (WPP.LN) said revenue growth slowed in the first quarter
as clients spent less in the U.S. and emerging markets.
The world's largest advertising company kept its forecast for
slower growth in 2017, reflecting a couple of large account losses
and what it called "challenging top line growth opportunities and
uncertainties" for its clients.
Like-for-like net sales--a measure used to judge the company's
underlying performance--rose 0.8% in the three months to March 31,
in line with the analysts' expectations. WPP said that particularly
strong sales growth in the same period a year earlier made the
latest figures look weaker and growth should accelerate in the
second half.
The U.K.-based company, whose agencies include Mindshare and
JWT, said Thursday that its net new business billings had
accelerated in the first three months of the year, winning $2.1
billion of net new work compared with $1.8 billion in the same
period last year.
"It's a soft start to the year and they have a bit of catching
up to do," said Kepler Analyst Conor O'Shea. "The big swing factor
is the U.S. market, which has been a problem for the whole
sector."
Run by Chief Executive Martin Sorrell, WPP has expanded its
digital operations and made acquisitions to outpace rivals such as
Omnicom Group Inc. (OMC) and Publicis Groupe SA (PUB.FR) as
spending for ads in traditional media has slowed in recent
years.
In North America, which accounts for almost 40% of the company's
revenue, net sales fell 1.1% on a like-for-like basis. The measure
was up 3.7% in the U.K., 4.3% in Western continental Europe and
declined 0.1% in emerging markets.
North America was "challenged" as the company's top 20 clients
have all struggled to boost growth in a tepid global economy,
cutthroat competition and fast-shifting consumer tastes, Mr.
Sorrell said.
Competitors Omnicom, Publicis and Havas SA (HAV.FR) have also
reported weaker numbers in the U.S. for the first quarter.
WPP said operating profit for the period was well above budget
and ahead of last year. Reported revenue rose 17% to 3.6 billion
pounds ($4.64 billion), lifted by favorable currency
translation.
The company repeated that it is budgeting for around 2% growth
in both revenue and net sales for 2017.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
April 27, 2017 03:47 ET (07:47 GMT)
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