WPP Lowers Growth Guidance for 2023

WPP, the London-based advertising group, has revised down its growth guidance for the year following a decline in pretax profit during the first half. The company experienced a slowdown in its largest market, the United States, primarily due to reduced spending on technology.

The revised forecast now projects like-for-like growth in revenue, excluding pass-through costs, for 2023 to be between 1.5% and 3%, down from the previously anticipated range of 3% to 5%. However, WPP remains confident that its headline operating profit margin will remain around 15.0%.

During the six months ending June 30, pretax profit plummeted to £204 million ($259.5 million) compared to £419 million for the same period the previous year. Consensus estimates compiled by Visible Alpha had anticipated a figure of £461.4 million. Similarly, headline pretax profit dipped to £546 million from £562 million.

WPP reported a like-for-like growth rate of 2.0% for the six-month period, with revenue excluding pass-through costs amounting to £5.81 billion compared to £5.51 billion the previous year. This fell short of consensus estimates of £5.87 billion, with an anticipated growth rate of 2.95%.

In North America, WPP observed a 4.1% decline in like-for-like revenue excluding pass-through costs during the second quarter. This can be attributed to reduced revenue from technology clients and delays in project spending. However, there were positive signs as China experienced growth during the three-month period, albeit at a slower pace than expected.

As part of its cost-saving measures, WPP plans to consolidate office space and anticipates booking a GBP220 million impairment charge for the full year. Regardless, the company announced a stable interim dividend of 15 pence per share.