WPP Shares Slide as Revenue Growth Slows -- 2nd Update
03 Marzo 2017 - 9:59AM
Dow Jones News
By Nick Kostov
Shares in WPP PLC fell more than 6% after the world's largest
advertising company reported its slowest quarter of revenue growth
since 2012 and sounded a cautious tone about 2017.
The U.K.-based company, whose agencies include Mindshare and
JWT, said Friday that annual net profit rose 21% last year to
GBP1.4 billion ($1.72 billion).
Revenue rose 18% to GBP14.39 billion last year, but
like-for-like net sales--a measure used to judge the company's
underlying performance--rose 2.1% in the three months to Dec. 31,
its slowest rate since the third quarter of 2012. WPP said that
particularly strong sales growth in the same period a year earlier
made the latest figures look weaker.
The company forecast slower growth for 2017, reflecting fewer
new business wins in recent months and what it describes as a
"tepid" macroeconomic environment.
However, it raised its dividend to 56.6 pence from 44.69
pence.
Run by Chief Executive Martin Sorrell, WPP has expanded its
digital operations and made acquisitions to outpace rivals like
Omnicom Group Inc. and Publicis Groupe SA as spending for ads in
traditional media has slowed in recent years.
However, the group has posted a relatively slow start to the
year, with January like-for-like net sales up 1.2% from the same
period last year. WPP said it is budgeting for around 2% growth in
both revenue and net sales for 2017.
"Clients are generally grinding it out in a highly competitive
ground game, rarely resorting to a passing game or Hail Marys," the
company said, adding that the year would be influenced by the
buildup for the soccer World Cup in Russia next year and the
midterm congressional elections in the U.S.
The company said it was cautious about the economic outlook and
its clients' inclination to spend on advertising campaigns.
The outlook "will not be taken well," said Charles Bedouelle, an
analyst at Exane.
He said that it reflects the loss of some large media buying
accounts in 2016 with companies like AT&T Inc. and Volkswagen
AG as well as pressure from clients to get more for their marketing
dollars.
WPP raised its dividend to 56.6 pence from 44.69 pence.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
March 03, 2017 03:44 ET (08:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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