New WPP CEO Mark Read (below) faces one of the less than joyous occasions that go with the new job on Thursday when he updates shareholders and others on WPP’s Q3 performance. Analysts expect revenue and profit to be down with organic growth inching forward by just 0.3 per cent.
WPP has not had a good quarter, losing Ford creative and GSK, United Airlines and American Express media although it has retained some Ford business and won the Panadol account from GSK. These will mostly affect next year’s numbers.
More worrying in the short term for Read is the WPP share price, down 24 per cent in a year which means that WPP is now valued at $17bn, neck and neck, as the Guardian usefully reminds us, with long time rival Omnicom. Back in 2014, at the height of the Sorrell era, WPP was valued at nearly $30bn, half as much again as Omnicom. WPP’s debt stands out about $8.6bn, hardly comfortable with the shares bumping along the bottom.
Read’s strategy is to streamline the group – as instanced in the merger of VML with Y&R – to make it more “agile” in the modern parlance, and to make non-core disposals to strengthen the financials. He’s promised the results of a full scale review later this year or early next.
That might not be soon enough for some shareholders though: the storm clouds are gathering. If WPP isn’t growing they’ll expect some news on how it can be profitably smaller. Selling some or all of research operation Kantar looks the most likely quick fix although that will sit uncomfortably with the current emphasis on all-conquering data.
Who’d be a CEO?