Way down in the announcement of WPP’s half-year results is the following, describing its most recent trading:
In July, like-for-like revenue and net sales were down 4.1% and 2.6% respectively. All regions, except the United Kingdom, Latin America and Central & Eastern Europe showed lower revenue than the prior year and all sectors were down, with advertising & media investment management and data investment management the most affected. Cumulative like-for-like revenue and net sales growth for the first seven months of 2017 is now -0.9% and -0.8% respectively.
The Group’s quarter 2 revised forecast, having been reviewed at the parent company level in the first half of August, indicates full year like-for-like revenue and net sales growth of between zero to 1.0%, lower than previous forecasts of 2%, with a stronger second half, partly reflecting easier comparatives in the second half of 2016.
In other words WPP isn’t just becalmed it’s going backwards – and would be going backwards a heck of a lot quicker if it wasn’t for the weak British pound artificially boosting revenue and profits reported in sterling.
In sterling WPP reported half time revenue of £7.4bn and pre-tax profit of £779m. Advertising and media planning and buying was its strongest performing activity with data investment management bringing up the rear, as usual. The UK was the strongest region with the US, source of most of WPP’s money, weakest. The US has been weak for all the big holding companies this year but WPP’s performance is, arguably, worse. All the WPP numbers are here.
WPP has been here before of course, but not that often. In the 1990s it overpaid for Ogilvy & Mather as the market dropped, a life-threatening experience. It tried to pull out of buying media agency CIA after the financial crisis of 2008 (CIA is now MEC).
But founder and CEO Sorrell needs to do something and fast to show that he’s still worth his dizzying pay, £48m at last count.
He could start with WPP’s data investment management, about 20 per cent of the company by revenue, which has never made serious money and probably never will. Surely a disposal of some or all of it must be on the cards.
Hoping that things turn up for Christmas (like the Unilever and P&G ad budgets) won’t be enough.
WPP shares fell 11 per cent in early London trading this morning, leading the FTSE100 down. WPP boss Sorrell is a big shareholder with a £200m plus stake.