WPP sees signs of optimism among key U.S. clients
Reuters
Published Feb 22, 2024 07:13
Updated Feb 22, 2024 09:31
By Paul Sandle
LONDON (Reuters) -WPP, the advertising group that owns Ogilvy and GroupM, said clients in the United States were starting to feel more positive but it would see little or no upside in the first half of the year due to the loss of some creative accounts.
The British company said on Thursday its key revenue metric rose 0.3% in the final quarter, resulting in a 0.9% rise for the year, as weak spending by U.S. tech, healthcare and retail clients held back growth in Britain and India.
Full-year headline operating profit rose 0.5% to 1.75 billion pounds ($2.22 billion), in line with guidance last month for its margin to come in at 14.8%.
Chief Executive Mark Read said 2023 had been more challenging than expected as tech clients cut spending.
Like-for-like organic revenue in the United States - its biggest market - dropped by 4.5% in the fourth quarter, a deterioration on the 4.2% fall in the third quarter.
The weakness was exacerbated by client losses, including some creative accounts for pharma group Pfizer (NYSE:PFE).
"I don't think that we saw a general improvement in the U.S. macro conditions, although I would say clients are starting to feel a little bit more positive in the U.S.," Read said in an interview on Thursday.
Shares in WPP (LON:WPP), which have fallen 23% in the last 12 months, were trading down 1.8% at 766 pence in early deals, as the company reiterated its guidance for growth of between zero and 1% this year, and a 20-40 basis points improvement in margin.
WPP's rival Publicis this month forecast 2024 organic net revenue growth of 4% to 5%, saying that it had "definitely extracted itself from the pack" after years of transformation.
Read said clients were spending less on project-related business in its specialist agencies and in its design companies.
But WPP saw good growth in its media buying business GroupM, creative agency Ogilvy and in public relations, he added.
($1 = 0.7872 pounds)
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Written By: Reuters
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