WPP shares fall after a dip in sales and billings

Advertisers tighten their belts

Shares in advertising giant WPP fell more than 10 per cent this morning after the company reported a dip in like-for-like sales in the first half of the year.

Reported billings were up 6.3 per cent at £26.9bn but down 4.7 per cent in constant currency. Net like-for-like sales also dropped by 0.5 percent.

Pre tax profit was up 15 per cent to £793m from £690m.

However the group further revised down its second quarter full year forecasts, with both like-for-like revenue and net sales forecast to be between zero and 1.0 per cent growth, citing ‘pressure on client spending in the second quarter particularly in the fast moving consumer goods (fmcg) or packaged goods sector.’

Chief executive Sir Martin Sorrell said these sectors make up a third of the groups business and the reduce forecast puts them on course for their worst year since the global recession in 2009 when like-for-like sales fell by 8.1 per cent.

In a statement the group said: “In the last year or so, growth has become even more difficult to find, perhaps due to increasing social, political and economic volatility, for example with the rise of populism typified by surprise election results in the United Kingdom and the United States and bumpy growth in three of the bigger BRIC countries of Brazil, Russia and China, although India continues to develop rapidly.”

“In a slower growth world, both more recently and post-Lehman, inflation has been negligible, perhaps also suppressed by digital deflation. As a result, clients have markedly less pricing power and finance and procurement departments are very focused on cost. In this world, it is, perhaps, not surprising that clients have reduced spending.”

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