WPP WPP PLC

   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)

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