WPP – agency growth stalled by tech slowdown and China
- Net revenue fell 0.6% on a like-for-like (LFL) basis in third quarter
- Declines led by weakness from technology clients and China
- LFL net revenue growth for full year now expected to be 0.5 – 1.0% as expectations are lowered for a second time
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:
“Communications and advertising giant WPP’s engines have stalled again. Usually high-spending technology clients in North America have applied the brakes amid an uncertain economic backdrop. China’s also dragging performance down as the macro environment doesn’t lend itself to loose corporate spending. This has culminated in another reduction in full year expectations. While seeing growth go into reverse isn’t ideal, it’s not wholly unexpected given that advertising activity is a clear-cut barometer of the economy.
WPP is doing what it can to combat these challenges, including consolidating and streamlining its offering. That could mean the business that emerges from all this could be stronger than what it started with, but there are considerable speed bumps to traverse first. As the digital world transforms at pace, this giant will have to move as nimbly as it can if it wants to thrive.”
