WPP client wins help revenue decline slow
Ad giant WPP reported another fall in sales in the third quarter but the pace of decline slowed from the previous quarter.
The British owner of the Ogilvy, Grey and GroupM agencies said its like-for-like sales had dropped by 5.5 per cent to £2.97bn, compared with a 11.5 per cent drop in the previous quarter.
WPP has had to contest with its clients slashing spending to cut costs but a series of client wins, including Uber, Alibaba and HSBC has contributed to an improvement in third quarter trading.
The group has also renewed and expanded its relationship with American retailer Walgreens Boots Alliance.
WPP said it had won $1.6bn in new business in the three months to September, taking the year-to-date wins to $5.6bn.
Like-for-like revenue at WPP’s global integrated agencies was down 6.7 per cent in the third quarter, a marked improvement on the 11.3 per cent drop in the previous quarter, as client media expenditure started to pick up.
The public relations segment continued to be the best-performing with like-for-like revenue down 2.9 per cent, a slight improvement on the 7.5 per cent drop in the second quarter.
WPP highlighted tight cost control and said it is on track to be towards the higher end of its £700m to £800m cost reduction target.
Despite the group’s progress in the quarter on both cast management and recovery, WPP remains cautious in its outlook “as we track further waves of the pandemic and government responses.”
“Given the tightening of Covid restrictions around the world and uncertainty in the global economic outlook, we remain cautious about the pace of recovery,” chief executive Mark Read said.
Assuming no further lockdowns in any of its major markets, WPP expects full-year like-for-like revenue to be within the current range of analysts’ forecasts of -8.5 per cent to -10.7 per cent.
“Notwithstanding continuing uncertainty over short-term advertising spend, we are encouraged by the momentum flagged in this morning’s update, continue to view WPP as a quality business and like the way in which it is been repositioned”, Shore Capital analysts said in a note today.
Shares were down 3.25 per cent in morning trading.