Ad group WPP cuts full-year sales forecast on weak client demand

LONDON: WPP, the world’s largest advertising group, cut its full-year net sales outlook on Wednesday after it missed first-half targets due to a drop in demand from consumer goods clients and weak trading in the United States.
WPP, led by the high profile businessman Martin Sorrell, reported first-half like-for-like net sales down 0.5 per cent, below a consensus of 0.7 per cent growth.
It cut its full-year underlying net sales target to between 0 and 1 per cent growth, from a previous forecast of 2 per cent growth.
Despite the slowdown at the top line, the group reiterated its target for a 0.3 point improvement in its operating margin.
“All regions, except the United Kingdom, Latin America and Central and Eastern Europe showed lower revenue than the prior year and all sectors were down, with advertising and media investment management and data investment management the most affected,” it said.
WPP rattled investors in March when it cut its 2017 sales forecast, citing an ultra competitive environment in which rivals were having to scrap for every dollar of ad spend.
From 3.1 per cent net sales growth in 2016, WPP had set a 2017 target of 2 per cent to reflect “tepid” economic growth and weaker net new business trends.
The group has seen a particular slowdown in the United States, where underlying net sales fell by 2.2 per cent in the first half of the year.
WPP said a cyber attack in June had not affected revenue or its data and could not be blamed for the slowdown. — Reuters