WPP cuts growth view as client spending drops

WPP Group CEO Sir Martin Sorrell And Ryan Serhant Visit Fox Business Network's'Opening Bell

WPP Group CEO Sir Martin Sorrell And Ryan Serhant Visit Fox Business Network's'Opening Bell

Weak trading in America and a drop in spending on consumer goods has led WPP to lower its expectations for full-year net sales for the second time this year.

It also pointed to worries over whether a weakened Donald Trump could enact tax reform and infrastructure plans, as well as highlighting the United Kingdom election result as it pointed to "increasing social, political and economic volatility".

Run by Chief Executive Martin Sorrell, WPP's share price has dropped this year with many of its largest clients struggling to boost growth amid a tepid global economy, cutthroat competition and fast-shifting consumer tastes.

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As a result, the London-based group reported first-half like-for-like net sales down 0.5%, below a consensus of 0.7% growth.

Pre-tax profit rose more than 52 per cent to £779m in the period. It now expects growth of 0%-1% this year. WPP has already rattled investors in March when it set a 2017 target for net sales growth of just 2%.

WPP said the decline had worsened in July with a fall of 2.6% compared to the same month a year ago.

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The advertising giant posted a 1.9 per cent rise in revenue to £7.4bn in the first six months of the year, but like-for-like net sales fell 0.5 per cent.

"Trumponomics may well have resulted in an increase in the United States GDP growth rate ...the limitations of the new administration seem to be jeopardising the anti-regulatory, infrastructure and tax reduction programme that was promised", he said.

"Continued client pressure on costs and spending, particularly amongst packaged goods clients, was a significant element in keeping the Group's operating margin flat in constant currency in the first half, and below the Group's full year margin objective of 0.3 margin points improvement on a constant currency basis", WPP said.

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The company said "all sectors were down", with advertising and media investment management and data investment management the most affected.

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