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Key Takeaways
- WPP lowered its guidance and warned of a pullback in client spending, citing a “challenging economic backdrop.”
- The big ad agency reported a bigger-than-expected drop in second-quarter business, and sees that continuing the rest of the year.
- The news sent U.S.-listed shares of WPP to their lowest level since March 2020.
An outlook cut and warning about client spending sent U.S.-listed shares of advertising giant WPP (WPP) plunging 30% Wednesday.
The London-based firm pointed to “a challenging economic backdrop,” which has caused a “deterioration in performance as Q2 has progressed.” It added that it expects “continued macro uncertainty weighing on client spend and weaker net new business than originally anticipated.”
WPP now sees full-year like-for-like revenue, excluding pass-through costs, down 3% to 5%. Previously, the company predicted it would be flat to 2% lower. In addition, WPP’s new outlook for headline operating profit margin is for a drop of 50 to 175 basis points, compared to the earlier estimate of flat.
CEO Mark Read explained that while the company “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.”
WPP’s U.S.-listed shares sank to their lowest level since March 2020.
CORRECTION and UPDATE—This article has been updated to give the latest share price information and correct the last time WPP’s U.S.-listed shares were this low.
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