WPP Shares Cut Predictions in World's Number 1 Ad Group

The British company, which owns agencies such as J. Walter Thompson and Group M, said its constant-volume business, an essential measure of its operational performance, declined by 1.5% for the quarter ended September 30th. Analysts were expected at 0.4%. ascend.

The company said it is now expecting a drop in its annual turnover from 0.5% to 1.0%, on a like-for-like basis. Previously, the company expected revenue on a like-for-like basis to be similar to the first half, with like-for-like revenue increasing 1.6% year-over-year. previous year and comparable net sales of 0.3%.

WPP warned in its call for results on Thursday that 2019 would also be difficult.

More recently, WPP shares listed in London were down 15% to 899.30 pence. The FTSE 100, of which WPP is a component, was 0.4% lower.

Read took the helm of WPP in September after the company was shaken by the sudden departure of longtime CEO and founder Martin Sorrell in April.

On Thursday, Read said that WPP could return to growth, despite disruptions in the advertising industry, with increased competition from consulting firms, marketers reducing the fees they pay to advertising agencies and changes in consumer behavior.

"We are clearly underperforming our competitors, this is something we are aware of and it reinforces our determination to take steps to invest in the company and make the necessary changes," he said. .

First, he will have to stop the loss of accounts in recent weeks.

Ford engine
Co.

, one of the largest customers of the company, has replaced its creative tasks by

Omnicom Group
Inc.

in October and businesses including

American Express
Co.

,

PepsiCo
Inc.

Mercedes-Benz of Daimler AG have recently left the WPP market.

The company sells assets to reduce its debt-to-earnings ratio and simplify its sprawling operations. In its statement on Thursday, the WPP confirmed that it would seek to divest a stake in its underperforming market research group, Kantar Group, in the largest sale since Mr. Read's takeover as CEO. Kepler Cheuvreux analysts have estimated the unit between 3 billion euros ($ 3.4 billion) and 4 billion euros in December.

"The sentiment around WPP has been very weak, but we hope this will help restore some confidence and partially repair a crumbling balance sheet," said Alex DeGroote, founder of the DeGroote Consulting Media Advisory.

WPP peers announced market-friendly sales last week, with third-quarter organic sales growth ranging from 1.3% at its French competitor Publicis Groupe SA to 5.4% at

Interpublic Group

of Co.

Mr. Read said Thursday that the problems faced by WPP "are, to a certain extent, company-specific."

He has reorganized the activities of WPP in the hope of making them more agile and investing in companies that seem to master the technologies. WPP announced Wednesday the consolidation of health agencies in Ogilvy, Wunderman and the recently merged VMLY & R creative agency.

"We have great assets within the group. We just need to make it easier for customers to access it, "said Read, adding that it would take" a while "to see the results of his strategy.

Again this quarter, WPP said the downturn in its North American operations and creative creative agencies weighed on the group's performance in the third quarter. In North America, like – for – like sales decreased 5.3% compared with the same quarter last year.

"We have a strong creative talent, we just need more," said Read, who said the company would not exclude acquisitions in this area, although such deals are likely to be concentrated on technology.

Overall revenues decreased 0.8% to 3.76 billion pounds sterling (4.85 billion dollars) in the third quarter, from 3.79 billion pounds a year earlier.

WPP also announced Thursday that Group Chief Financial Officer Paul Richardson will retire in 2019.

The company is expected to provide another update of its strategy in December.

-Adria Calatayud contributed to this article.

Write to Nick Kostov at [email protected] and Lara O'Reilly at lara.o [email protected]