New contracts help WPP deliver better-than-expected Q2
Advertising giant WPP said reported a better-than expected performance in the second quarter as it won new business and expanded deals from major clients such as eBay and Instagram.
Like-for-like revenue less pass-through costs fell 1.4% quarter on quarter, for a first-half decrease of 2%, the company said on Friday.
The company, under new chief executive Mark Read, said reported billings were flat at £26.5bn, while revenue for the period was up 1.6% to £7.6bn as the company maintained full year guidance on like-for-like revenue less pass-through costs, which it expected to be 1.5% - 2.0% lower.
Like-for-like revenue less pass-through costs for the half came in at £6.1bn.
Reported pre-tax profits fell 44% to £478m driven primarily by a “significant” gain in 2018 that was not repeated and a charge on the revaluation of financial instruments versus a credit in 2018.
"WPP's performance in the second quarter was slightly ahead of our internal expectations but in line with our full-year guidance and three-year strategic targets,” Read said in a statement.
"That said, we are still in the early stages of our three-year turnaround plan, and we remain focused on returning the company to sustainable growth over that period. Our guidance for the full year is unchanged.”
There was improvement in North America, which makes up 35% of WPP's global revenues. Second quarter revenues were down 5.3%, compared with 8.5% in the first three months of the year.
"The impact of assignment losses among automotive, pharmaceutical and fast moving consumer goods clients in 2018 continues, but at a slower rate than the first quarter. This performance, whilst disappointing, is in line with our budgets, the company said.
WPP is trying to transform itself after the sudden departure in April last year of chief executive Martin Sorrell over alleged misconduct, which he denied, and several profit warnings.
In July WPP said it planned to sell 60% of its Kantar market-research business to US private equity company Bain Capital, valuing it at $4bn (£3.19bn).
The advertising giant said it would keep $3.1bn to cut debt to the low end of a target range, with the balance of $1.2bn returned to shareholders.
"When the Kantar transaction completes, our disposal programme will have generated proceeds of around £3.6bn,” Read said on Friday.