WPP Share Downtrend Continues: Guidance Cut Following a ‘Deterioration in Performance’

WPP (LON: WPP) shares fell on Wednesday after the advertising giant lowered its guidance, citing worsening macroeconomic conditions and weaker-than-expected new business.

After a brief, yet shallow rise over the last couple of weeks, the latest update has seen WPP shares resume their downtrend. The stock is down more than 12% in early Wednesday trading at 461.5p a share, its lowest level since March 2020.

In a first-half trading update, the company said like-for-like revenue less pass-through costs is expected to decline by 4.2% to 4.5%, with a steeper 5.5% to 6.0% drop in the second quarter alone. 

Headline operating profit for the period is forecast to fall to between £400 million and £425 million, a decline in margin of up to 330 basis points year-on-year.

WPP cut its full-year guidance, now expecting revenue less pass-through costs to decline by 3% to 5%, compared to earlier projections of flat to down 2%. Operating margins are also forecast to fall by 50 to 175 basis points.

“While we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated,” said Chief Executive Mark Read. “We expect this pattern of trading in the first half to continue into the second half.”

Read added that the company remains focused on “investing in the business for the long-term” while also reducing structural costs. Recent severance actions at WPP Media are expected to generate over £150 million in annualised cost savings.

The group is scheduled to report its interim results on August 7.