WPP Forecasts Flat Revenue, Sales; to Simplify Structure -- Earnings Review
01 Marzo 2018 - 1:00PM
Dow Jones News
By Adria Calatayud
WPP PLC (WPP.LN), the world's largest advertising company,
reported its results for 2017 on Thursday. Here's what you need to
know:
REVENUE: The London-based company generated revenue of 15.27
billion pounds ($21.13 billion), a rise of 6.1% from GBP14.39
billion in 2016. This beat a consensus forecast of GBP14.02
billion, based on estimates by 25 analysts polled by FactSet.
However, revenue grew only 1.6% at constant-currency terms and
declined 0.3% on a like-for-like basis--excluding foreign-exchange
swings and acquisitions. This was WPP's first like-for-like revenue
fall since 2009 and sent the company's shares down as much as 14%
in morning trade Thursday, its biggest one-day drop since May
1998.
NET PROFIT: The owner of creative and media agencies such as J.
Walter Thompson and Ogilvy & Mather made a net profit of
GBP1.82 billion for 2017, increasing 30% year-on-year and well
ahead of analysts expectations of GBP1.46 billion.
WHAT WE WATCHED
YEAR AHEAD: WPP forecasts flat like-for-like revenue and net
sales for 2018, as well as a stable headline operating margin
target, after a slow performance in the first weeks of the year.
January like-for-like revenue was flat and net sales fell 1.2%, the
company added. "Nobody was expecting these results to sparkle, but
WPP saying trading conditions have deteriorated to the extent it
doesn't think it'll deliver underlying growth next year has come as
a surprise," Hargreaves Lansdown analyst said.
SALES: The advertising giant posted a 0.9% like-for-like decline
in net sales--a closely watched metric for the company's underlying
performance--for 2017, against guidance that they should be
"broadly flat." In 2016, like-for-like net sales rose 3.1%. "2017
for us was not a pretty year, with flat like-for-like, top-line
growth, and operating margins and operating profits also flat, or
up marginally," WPP Chief Executive Martin Sorrell said.
CORPORATE SIMPLIFICATION: WPP said it intends to simplify its
structure, to better compete in a market increasingly disrupted by
Google and Facebook. Mr. Sorrell said these changes seek to improve
coordination and sharing of functions, systems and platforms across
the group, building a more unified WPP. "The company, essentially a
conglomerate of lots of individual advertising businesses, plans to
merge several of its agencies to create a simpler proposition for
clients and strip out costs," AJ Bell Investment Director Russ
Mould said.
Write to Adria Calatayud at
adria.calatayudvaello@dowjones.com
(END) Dow Jones Newswires
March 01, 2018 06:45 ET (11:45 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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