Sparks

WPP’s trading update has reduced full-year guidance for revenue (less pass-through costs) from flat to negative 2% to a decline of 3–5%, with guidance for the full-year margin scaled back from flat to a reduction of 50–175bp. The top-line reduction is ascribed to lower levels of net new business wins (partly because the market for reviews is running well below last year and partly due to a downtick in conversion to win rate) and an acceleration in the run-off of business that had already been lost, on top of what has generally been a very weak market. Consumer packaged goods and autos have seen notable reductions in client spend. The lower end of the revised guidance now assumes continuing weakness in H2, where the group had previously expected some amelioration.

Severance costs from the group’s restructuring are an incremental £65m, with headcount down 3.5% from the start of the year. This should give some tailwind to margin the second half. Outgoing CEO Mark Read was keen to point out that the reconstruction of WPP Media in particular was going well, although the results are not yet obvious, and that client reception to the acquisition of InfoSum, which enhances its AI-driven offering, had been very positive. WPP Media and WPP Open remain the focus of the investment.

Further details will be given with the interim results scheduled for 7 August.