The WPP PLC (LON: WPP) share price dropped 8.14% after its H1 and Q2 2023 financial results. The world’s largest advertising company’s profits fell 51.2% to £204 million from £419 million in the first half of 2022.
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The ad company’s first-half revenues increased 6.9% to £7.2 billion from £6.76 billion in H1 2022. The firm attributed its impressive revenue growth to its GroupM division, which specialises in media planning and buying. The GroupM division saw its business grow consistently across all regions during H1 2023.
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WPP blamed the reduced spending from large technology companies in the United States as the primary reason behind its lower profits. The company’s Q2 revenues in North America declined as tech companies cut their advertising spending.
However, the company witnessed high growth from non-US markets, although growth in China was less robust than expected. The ad company noted that its H1 Headline operating profit margin was 11.5%, marking a 0.1% decline, but the figure was up 0.1% on a constant currency basis.
The world’s leading ad agency also revealed that it was working with large technology companies, including Adobe, Google, IBM, Microsoft, Nvidia and OpenAI, to develop AI-generated ads for its clients. However, there are numerous concerns about the impact of AI on unsuspecting consumers.
WPP’s earnings results have triggered rating downgrades from different analysts after the company lowered its full-year revenue growth guidance to 1.5% – 3.0% from 3.0% – 5.0%.
Mark Read, WPP’s Chief Executive Officer, said: “Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects. This was felt primarily in our integrated creative agencies.”
“China returned to growth in the second quarter, albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year. Our media business, GroupM, grew consistently across the first six months, as did our businesses in the UK, Europe, Latin America and Asia-Pacific.”
WPP share price.
The WPP share price dropped 8.14% to trade at 780.00p, from Thursday’s closing price of 849.10p.
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