WPP downgrades outlook as buyout rumours swirl
The world’s biggest advertising firm WPP has downgraded its full year guidance amid talk of a buyout from US firms.
WPP said it has reduced its outlook on like-for-like revenue less pass-through costs for 2023 down to 0.5-1 per cent from 1.5-3 per cent. Headline operating margin is now 14.8-15.0 per cent, down slightly from a solid 15 per cent.
Shares dropped as much as four per cent on Thursday morning.
Revenue less pass-through costs fell five per cent in the third quarter to £2.8bn, while normal revenue fell 1.8 per cent to £3.5bn, from the same period last year.
Chief executive Mark Read said: “Our top-line performance in Q3 was below our expectations and continued to be impacted by the cautious spending trends we saw in Q2, particularly across technology clients with more impact from this felt in GroupM over the summer than the first half.”
Two days ago the British technology giant said it had sacked an employee at its GroupM media agency in China — after authorities detained the unnamed person on suspicions of bribery last week.
WPP, whose clients include Estée Lauder, Lenovo and Nestlé, is rumoured to be a target for American buyout firms such as Blackstone and Silver Lake.
However, according to Mark Kleinman, both these firms privately wish to distance themselves from this speculation.
Shares in the company are down 17.5 per cent year to date.
It plans to hold a Capital Markets Day in January 2024 to update investors on its “strategic roadmap” to “drive growth” over the next three to five years.