WPP shares drop more than 11 per cent as sales and billings drop in first half

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WPP boss Sir Martin Sorrell (Source: Getty)

Shares in WPP tumbled this morning after the company reported a dip in like-for-like sales in the first half.

The figures

Billings for the period rose to £26.9bn, from £25.3bn in the first half of last year. 

Revenue was £7.4bn, up from £6.5bn, and net sales increased to £6.4bn from £5.6bn.

Profit before tax was up 15 per cent to £793m from £690m and up 1.8 per cent in constant currency.

Reported profit before tax rose by 83.3 per cent to £779m from £425m, or up 52.4 per cent at a constant currency rate.

However, net like-for-like sales dropped 0.5 per cent.

Shares in the Sir Martin Sorrell-led firm dropped by as much as 11.67 per cent this morning, the company's biggest dip since 2000, according to London Capital Group.

Read more: How the City reacted to WPP's tumbling share price

Why it's interesting

Analysts had predicted that WPP, which was recently hit by a cyber attack, would have a tough day today after unveiling the first half numbers.

And with shares down more than 11 per cent it's clear investors were not happy with the dip in like-for-like sales or the gloomy outlook in today's results. The advertising group has further revised down its second quarter full year forecast, blaming "pressure on client spending in the second quarter particularly in the fast moving consumer goods or packaged goods sector".

Both like-for-like revenue and net sales are now forecast to see between zero and one per cent growth, down from previous expectations of two per cent, and the company said 2018 is "unlikely to be much different".

What WPP said

"In the last year or so, growth has become even more difficult to find, perhaps due to increasing social, political and economic volatility, for example with the rise of populism typified by surprise election results in the United Kingdom and the United States and bumpy growth in three of the bigger BRIC countries of Brazil, Russia and China, although India continues to develop rapidly," the group stated today. 

"In a slower growth world, both more recently and post-Lehman, inflation has been negligible, perhaps also suppressed by digital deflation. As a result, clients have markedly less pricing power and finance and procurement departments are very focused on cost. In this world, it is, perhaps, not surprising that clients have reduced spending."

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