Shares in WPP (LON:WPP) have fallen deep into the red in London this morning, as the advertising giant updated investors on its second-quarter performance, posting a drop in profit and reported revenue. The report comes hot on the heels of the group’s announcement that it had appointed insider Mark Read as its new chief executive following the departure of Sir Martin Sorrell earlier this year.
As of 09:35 BST, WPP’s share price had given up 7.01 percent to 1,187.00p. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.02 percent lower at 7,502.96 points.
WPP posts second-quarter results
WPP announced in a statement this morning that its reported revenue had dropped 2.1 percent to £7.5 billion in the second quarter of the year, pressured by currency headwinds of five percent. In constant currency, the group’s revenue came in 2.9 percent higher, while like-for-like revenue was 1.6 percent up. The ad giant’s headline profit before interest and tax (PBIT) was down seven percent to £821 million, and down 2.3 percent in constant currency.
“The mix of performance by geography and function and a decision to invest in the growing areas of our business resulted in a slightly lower headline PBIT margin,” WPP’s new chief executive Mark Read commented in the statement, adding that his focus would be “on invigorating our company and returning the business to stronger, sustainable growth”.
Analysts weigh in on update
Proactive Investors quoted Graham Spooner, investment research analyst at The Share Centre, as commenting that the company had “announced good full-year results in June saying that volume growth momentum had continued into the new financial year”.
“It has also scaled back some expansion plans due to Brexit and investors will be interested to hear if that caution remains,” he pointed out, adding that “any news on the review of the plastics business will also be of interest, not just to investors in this company but others in the same sector”.