WPP slash growth forecasts, facing worst year in a decade

WPP has been forced to cut growth forecasts after a “much tougher” first seven months of the year than anticipated.

The world’s biggest advertising company cut full-year growth forecast for revenues to figures between zero and one percent. In early trading on Wednesday, shares in the group fell by 11 percent.

“Following the pressure on client spending in the second quarter, particularly in the fast moving consumer goods (FMCG) or packaged goods sector, the full year revised forecast has been revised down further, with both like-for-like revenue and net sales forecast to be between zero and 1.0% growth,” said WPP in a statement. 

“The limitations of the new [Trump] administration seem to be jeopardising the anti-regulatory, infrastructure and tax reduction programme that was promised,”

“America First, if the new administration’s plans are finally implemented, will almost definitely mean a stronger American economy, at least in the short-to medium-term.”

The chief executive, Sir Martin Sorrell, also said Trump was partly to blame for WPP’s poor performance.

“Trumponomics may well have resulted in an increase in the United States GDP growth rate … [but] the limitations of the new administration seem to be jeopardising the anti-regulatory, infrastructure and tax reduction programme that was promised,” he said. “The general atmosphere in relation to Trump and business has stuttered. It is not as good as it was.”

“All regions, except the United Kingdom, Latin America and central and eastern Europe showed lower revenue than the prior year and all sectors were down, with advertising and media investment management and data investment management the most affected,”

The company is more optimistic about 2018, where events such as the Russian World Cup, mid-term Congressional elections and PyeongChang Winter Olympics should help boost client spending.

Sorrell has previously complained of competitors offering their services for vastly reduced fees, something he believes is dragging the industry down.

“Our industry may be in danger of losing the plot,” he said. “These practices cannot last and will only result eventually in poor financial performance and further consolidation, the premium being on long-term profitable growth. As some say, you are only as strong as your weakest competitor.”