WPP’s new boss Mark Read said he would focus on returning the company to ‘stronger, sustainable growth’ as he unveiled his first set of results after his appointment to the top job yesterday.
The advertising giant saw net sales in its second quarter return to growth for the first time in over a year and lifted its outlook for 2018, but profit margins and headline profits fell.
WPP said like-for-like revenues less pass-through costs, or net sales, rose 0.7 per cent in the second quarter, the first increase since the first quarter in 2017, with the figure up 0.3 per cent in the half year at £6.3billion.
New boss: Mark Read said he will focus on returning WPP to ‘stronger, sustainable growth’
But underlying pre-tax profits fell by 7.4 per cent to £735million for the first half of the year, down 2.5 with currency effects stripped out. The group’s operating margin also fell by 0.4 per cent.
Like-for-like sales in North America, its biggest market by revenue, fell by 0.3 per cent in the second quarter.
But they rose in other countries, including the UK, where like-for-like sales rose 1 per cent, western continental Europe by 4.6 per cent rise and 4.5 per cent in Asia Pacific, Latin America, Africa & Middle East and Central & eastern Europe.
WPP shares fell 7.2 per cent to 1,183.5p in morning trading.
Mark Read, who was appointed chief executive yesterday after the controversial departure of Sir Martin Sorrel, said: ‘As chief executive, my focus will be on invigorating our company and returning the business to stronger, sustainable growth.
‘Our review of strategy is underway, addressing our structure, our underperforming operations, particularly in the United States, and how we position the company for the future. We will provide an update by the year end.’
He also said WPP had won or grown business with clients including Adidas, Hilton, Mars, Mondelez, Shell and T-Mobile and that it was continuing with disposals and divestments in a bid to focus its portfolio.
This includes the sale of its investment in Buenos Aires-based software business Globant, which means that on a statutory basis, pre-tax profits actually lifted 8.6 per cent to £846million, thanks to the one-off gains.
Ed Monk at Fidelity Personal Investing said: ‘WPP needs a steady hand on the tiller and the expected appointment of insider Mark Read to CEO is consistent with that aim.
‘Notwithstanding the disruptive departure of Sir Martin Sorrell this summer, the company needs to prove itself once again after a fall in revenues led to a painful correction to its share price earlier this year.
‘Today’s interim results were mixed with a return to like-for-like quarterly growth but lower profit margin and headline profits.
‘The challenge for WPP is to show it can live alongside the tech giants that have disrupted the ad world. Today’s half-year results showed some big name client wins like Adidas, Mars and Shell.
‘At price-to -earnings of just 8 ahead of the results, many will see value in WPP. The first job for Mark Read is to return the company to revenue growth and unlock that value.’
WPP’s announcement yesterday that Read will take the helm came months after the departure of long-standing boss Sir Martin in controversial circumstances.
Sir Martin left the company he founded more than 30 years ago, following allegations of personal misconduct. He raked in millions in payouts and bonuses, triggering several shareholder rebellions.