Shares in WPP plummeted as much as 17% in early hours trading this morning (27 February) as the group’s latest financial report revealed a -1.9% drop in net sales during the fourth quarter of 2019.
Full year net sales (like-for-like revenue less pass-through costs) were also down -1.6%, with the ad network forecasting a flat performance in 2020.
The group witnessed a surprisingly weak Q4 in the UK, with net sales dropping -3.7% compared with a 3.1% uplift in Q3.
According to WPP, this is due to the group’s global integrated agencies – particularly media investment wing GroupM – performing “less well”. For the year, net sales were up a marginal 0.3%.
WPP continues to struggle in North America, with sales down -4.5% in Q4 compared with -3.5% in Q3 – reflecting a “slightly weaker performance” in public relations and specialist agencies. The region was down -5.7% over the year.
Meawhile, Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe was the strongest performing region over 2019, up 1.4% overall, while the Western Continental Europe region followed with a yearly growth of 0.7%.
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Overall like-for-like revenue for 2019 remained flat at £13.2bn, while pre-tax profit dropped from £1.3bn in 2018 to £982m.
Nevertheless, WPP CEO Mark Read has said he feels “optimistic” about the future of both the company and the wider advertising industry.
“2019 was the foundational year for the new WPP strategy,” said Read, who launched the business’ three-year turnaround plan in December 2018 after taking on the top job. “We have made substantial progress in a short period of time.”
Read continued that the group had met its guidance for 2019, achieved its restructuring targets and completed the sale of a majority stake in Kantar (which it sold to Bain Capital in December).
He added that WPP’s refocus on “creativity powered by technology” has “resonated” with clients, and that the business is “confident of further progress against our 2021 targets”.
“There is still much more work to do. The marketing landscape has never been more dynamic and complex: clients need our help and expertise more than ever.”
