Shares in advertising and marketing agency WPP plunged on Wednesday, as deteriorating first-half trading caused it to slash sales and margin forecasts for 2025.
At 455.5p per share, WPP was last leading the FTSE 100 lower in midweek trade, down 15.6%.
The company said it expected like-for-like revenues (excluding pass-through costs) to drop between 4.2% and 4.5% during the first half.
It commented that “against a challenging economic backdrop, we have seen a deterioration in performance as quarter two has progressed.”
The company now expects second-quarter corresponding revenues to reverse between 5.5% and 6%, below previous expectations.
In North America, WPP said that conditions deteriorated between quarters one and two, meaning like-for-like revenues less pass-through costs “will be down low single digits” across the first half.
The business makes approximately 38% of total sales from North America.
It added that “other regions have remained weak despite an easing comparative.”
With restructuring costs at WPP Media adding extra pressure, the Footsie firm now predicts half-year operating profit to range between £400 million and £425 million.
Excluding currency movement impacts, operating profit margins are tipped to drop between 280 basis points and 330 basis points year on year, to 8%-8.5%.
Outlook Worsens
WPP chief executive Mark Read commented that “since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business.”
He added that “while we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated and we expect this pattern of trading in the first half to continue into the second half.”
As a consequence, like-for-like revenues excluding pass through costs are tipped to fall between 3% and 5%. WPP had previously expected this to range between being unchanged year on year to dropping 2%.
WPP said that “with the macro environment weighing more heavily on client spending and less support from net new business (including pull forward of losses originally anticipated in 2026), we are updating our full-year guidance.”
Operating profit margins are also now tipped to drop between 50 and 175 basis points, excluding forex volatility. They had been anticipated to flatline before Wednesday’s update.
“Poor” Performance
Describing WPP’s start to 2025 as “poor,” analyst Aarin Chiekrie of Hargreaves Lansdown said that “there’s not likely to be much let-up over the second half either, so the group’s going to need new ways to engage clients and protect margins.”
He added that “to make matters worse, the new business pipeline is drying up, with performance in June being worse than WPP expected.”
Noting that “restructuring is proving a distraction for management and weighing on margins,” Chiekrie commented that “more needs to be done to turn WPP’s future around, and while the hunt for a new CEO continues, it’s unlikely that WPP will regain its crown as the world’s biggest advertising agency.”
Mark Read announced last month plans to retire as chief executive on 31 December. He has held the top job since WPP founder Martin Sorrell left the company in 2018.