The company also lowered its growth forecast for the year: 0.5% to 1%, a percentage below the previous forecast of 1.5% to 3%
WPP presented data for the third quarter of 2023 to the market. In the document, the group reduced its revenue growth outlook after reporting weak sales, blaming the reduction in technology industry spending and China’s weak economy.
According to the survey, general revenue for the third quarter, excluding transfer costs, fell 5% compared to the previous year, to US$3.4 billion. On a like-for-like basis, which excludes currency fluctuations, sales fell 0.6%.
In August, WPP had released results for the first half of this year, a period in which it recorded revenue of 7.2 billion pounds sterling (the equivalent of R$44.67 billion reais). The volume, however, represented an increase of 6.9% compared to the same period in 2022.
Regarding comparable revenue, the document pointed out that, minus transfer costs, it should grow by 0.5% to 1% in the year, a percentage below the previous forecast of 1.5% to 3%. Furthermore, currency fluctuations will be responsible for a 1% decline in revenue.
The financial market reacted to the WPP publication, causing shares to suffer a drop of up to 5% at the start of trading this Thursday (26).
The company also cited continued cutbacks from technology clients, which have affected the advertising industry as a whole. According to Mark Read, CEO of WPP, these spending cuts deepened this year, pointing to a drop in Meta’s marketing.
Our billing performance in the third quarter was below our expectations and continued to be impacted by the cautious spending trends we saw in the second quarter, especially at technology customers.”
WPP also reported that sales outside the US, UK and Europe declined by 5.5% compared to the previous quarter. According to information provided by the company, much of the drop came from China, where the company said it saw a slower-than-expected economic recovery hitting marketing budgets.
In a rapidly changing world, we need to continue to evolve our offering to customers and simplify our business. I am excited about the creation of VML and the continued evolution of GroupM. Both developments will strengthen our customer offering, simplify the integration of our services and maximize the returns from our ongoing investments in AI and technology,” added Read.
