WPP shares have tumbled by the most in almost three decades after the world’s biggest advertising group said its sales will stagnate this year on the heels of a bigger than expected decline in the final three months of 2019.
The company said on Thursday revenues less pass through costs — the measure watched most closely by analysts — dropped 1.9 per cent in the final quarter of last year. The decline was sharper than the 0.8 per cent dip analysts forecast.
WPP said it did not expect a rebound this year, forecasting no change to its revenues in 2020 following a drop of 1.6 per cent last year. Analysts had pencilled in a 0.4 per cent rise in revenues for this year prior to Thursday’s release.
The FTSE 100 company’s shares plunged as much as 17 per cent on Thursday, on track for their biggest one-day percentage fall since 1992, Refinitiv data show.
WPP is in the second year of a three-year turnround plan, with chief executive Mark Read leading a battle against tech groups such as Google and Facebook that have competed vigorously against traditional industry players.
Mr Read is attempting to slim down the group’s unwieldy structure, having sold more than 40 businesses since Martin Sorrell, WPP’s longtime chief executive, stepped down in April 2018.
“I am optimistic about the future of our industry and WPP’s position within it, although there is still much more work to do,” Mr Read said in a statement on Thursday.
Thursday’s outlook does not include an impact from the coronavirus outbreak that has spread around the world and affected a wide range of major businesses.
WPP’s pre-tax profits dropped 21.9 per cent last year to £982m, the group said on Thursday. Reported revenues rose 1.4 per cent to £13.2bn.