FILE PHOTO: Branding signage is seen for WPP Group, the largest global advertising and public relations agency at their offices in London, Britain, July 17, 2019. REUTERS/Toby Melville
LONDON (Reuters) – WPP (WPP.L), the world’s biggest advertising company, reported a sharp slowdown in its final quarter of the year on Thursday and said it did not expect any improvement in 2020, hammering its shares once again.
WPP, which is in the middle of a three-year turnaround plan after it lost some major clients, reported a 1.9% drop in its main measure of organic revenue minus pass-through costs after recording 0.5% growth in the previous quarter.
Its shares fell more than 12% in early trading to their lowest since Feb. 8 last year.
For 2020, it said it would target flat organic revenue and a flat headline operating profit margin, which was 14.4% in 2019, before growing in line with rivals by 2021.
“I am optimistic about the future of our industry and WPP’s position within it, although there is still much more work to do,” Chief Executive Mark Read said.
For its 2019 fiscal year, the company reported a 1.6% drop in organic sales, which excluded its data business Kantar after it sold a major stake in the division to Bain Capital.
WPP has endured a tough three years after losing major clients such as Ford (F.N) and American Express (AXP.N) in the United States. While its operating performance has started to improve, its shares had already more than halved since March 2017 before Thursday’s slide.
Read, a company veteran who took over from founder Martin Sorrell in 2018, has merged agencies and changed incentive schemes to provide a more streamlined service after clients complained that WPP, which owns Ogilvy, Grey and Finsbury, had become too unwieldy.
The sale of a 60% stake in Kantar for about $3.1 billion helped the group to cut its debt significantly.
Reporting by Kate Holton; Editing by Paul Sandle and David Clarke