WPP hammered as disastrous trading update sets scene for incoming boss
The wheels are well and truly coming off at WPP – CEO Mark Read is stepping down at the end of the year, likely sooner – with a new half year trading update showing the one-time market leader’s problems are mounting.
WPP says there’s been a “deterioration in performance” over the first six months of the year with organic revenue in Q2 down 5.5-6%, much lower than than the 2% or so decline expected. Profits are forecast to tumble too, in part due to what it calls “severance action at WPP Media.” Job losses in other words as EssenceMediacom, Mindshare and Wavemaker are folded into WPP Media.
WPP is now forecasting 3-5% organic decline for the year, optimistic given its recent forecasting record with major account losses Mars and Coca-Cola US media still to fully impact. Its stock market value has fallen to below £5bn with the shares tumbling 13% in early trading.
CEO Read says: “Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business. While we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated and we expect this pattern of trading in the first half to continue into the second half.
“Our focus remains on ensuring the right balance between investing in the business for the long-term and continuing to reduce structural costs, while taking appropriate actions to respond to the current trading environment.”
Only a couple of weeks ago Read and WPP were hailing its Cannes Lions Creative Company of the Year award – draw your own conclusions about how revealing such baubles are (or aren’t.)
So who will take over from Read to helm what, at this stage, doesn’t look a very enticing prospect? Intriguingly The Drum has asked Paddy Power to make a book and it’s headed by new WPP Media CEO Brian Lesser (media is the biggest part of the business) at 9/4. Other insiders make up most of the list, with former Google UK boss Matt Brittin and David Droga also included although they appear to have ruled themselves out.
New chairman Philip Jansen is quoted at 10/1 and he could be worth a punt. One, because who else would want the job and someone has to do it, two, because as a former CEO of BT and before that payments company Worldpay he’s arguably more suited to the CEO role than chairman.
