WPP battles ‘low growth’ advertising market

Advertising giant WPP has cut its sales and profit margin forecasts for the second time in two months.

WPP said like-for-like net sales growth and operating margins would both now be flat this year, instead of increasing by up to 1% and 0.3% respectively as the firm predicted in August. The forecast, which it said it would be reviewing shortly, came in its nine-month figures. It said of all its regions, the UK performed the best.

Sir Martin Sorrell, WPP’s chief executive, told the BBC: “Brexit in a way has actually stimulated our business. Clients, instead of investing in fixed capital are investing in variable costs [such as advertising] in an effort to stimulate growth.”

He added the world was in a “new normal of low growth, low inflation and limited pricing power”, which had exacerbated an emphasis on cost reduction.

The downgraded forecast sent WPP shares down 1%. They are currently priced around a third below their level at the start of the year.

The firm’s two profit warnings this year have prompted significant falls.

Source: BBC