WPP chief executive Mark Read has said he is determined to improve the company’s performance to compete with its peers, as shares plunged on this morning’s quarterly results.
The advertising business dropped as much as 22.5 per cent to 818 pence per share earlier today.
Sales fell 1.5 per cent in the third quarter, following a 0.7 per cent rise in the three months after Sir Martin Sorrell stepped down as chief executive.
“Clearly our earnings have been downgraded and in the short term that’s impacted the share price. We need to focus on how we get the business back to growth in the long term,” Read told City A.M.
“We have had a tough time at WPP for the last two years. I think that there is a lot of work we need to do and the slowdown we had in the third quarter gives us greater determination to take the action we need and think more radically about the business,” he said.
He said the company has faced increased competition as the rate of pitching for contracts intensified in recent years.
Earlier this month WPP lost a sizeable chunk of its contract with Ford, and it has lost pitches to American Express, GSK, HSBC, Opel and United Airlines.
Read said the company will focus on external candidates when replacing long-time finance chief Paul Richardson, who announced his retirement today.
The company’s North American business took a 3.5 per cent hit to revenue, accounts for the period show.
This was mainly driven by pressure from clients on WPP’s creative agencies, Read said, adding it would invest more in the creative side of the business.
“Clearly we have work that we’re determined to do to improve our performance to get back to level of peers.”
“I think any chief executive has to take responsibility for the company’s numbers. I knew the scale of the task when I took on the job and I think you have to look back in two to three years time and see how we are doing.”
Hargreaves Lansdown analyst George Salmon said: “While the group may be PR masters by trade, with net revenue trends falling pretty much across the board, major contracts slipping away and margins coming under pressure, there’s not many positive news stories to spin out of these results. Very much not the start new CEO Mark Read would have wanted.
“We’re yet to get the full details, but it looks like the over-riding theme of his restructure will be a simplification of the business. It’s easy to see why. Taking over at a group where success depends so much on having an in-depth knowledge of all the various agencies and divisions was always going to be a serious challenge.”