Shares in WPP plunged by the most in almost three decades on yesterday after the world’s largest media company revealed its interim Q4 results that showed a slowing North American market and fears around the impact of the coronavirus.
WPP reported a 22 per cent drop in pre-tax profit to £982m in 2019. Organic sales fell 1.6 per cent to £10.8 billion on a like-for-like basis excluding the impact of currency moves, acquisitions and disposals.
The news sent WPP’s share price tumbling yesterday by as much as 17 per cent, its biggest fall since 1992.
Coronavirus concerns aside, WPP’s North American market continued to be problematic. It was down was down 4.4 per cent to December, with the finger being pointed at GroupM’s performance having lost the Vodafone, Johnson & Johnson and Disney businesses.
The UK was down 3.3 per cent, which was a bit of a shock as the rest of 2019 had shown promise.
WPP is in the middle of a three-year turnaround plan and its CEO Mark Read said the company had achieved its restructuring targets through the sale of companies such as Kantar. “I am optimistic about the future of our industry and WPP’s position within it, although there is still much more work to do. The marketing landscape has never been more dynamic and complex,” Read said in a statement.
“The second half of 2019 was stronger than the first, with performance improving globally and in the United States, our largest market. Our new offer of creativity powered by technology has resonated with clients, as we’ve seen in good retention rates and important wins. New creative assignments include Instagram and Mondelez, and AXA, eBay and Hasbro were among the media wins.
“Perhaps most importantly, our clients and our people tell us that WPP has a clear new sense of purpose and is successfully instilling a culture of creativity, collaboration and openness. As we enter the second year of our three-year turnaround plan, our ability to attract and retain the best people is key to long-term growth,” Read said.
Read has said his 2021 target is to reach organic growth in line with the industry and a headline profit margin of at least 15 per cent.
