Mark Read has slashed away hope of an imminent return to growth at WPP (WPP). That’s hardly surprising for a new chief executive – cutting guidance makes it easier to beat in the long term. Shareholders were disappointed, but the 17 per cent share price fall on the morning of the announcement looks like an overreaction, especially considering previous forecasts were hardly inspiring. Like-for-like revenues less pass through costs (the best measure of top-line performance at WPP) are now expected to fall between 0.5 per cent and 1 per cent in 2018, compared with previous guidance of 0.5 per cent growth.
We’re more interested in plans to rescue the ailing marketing giant in the long term. Shareholders seem to have little faith, but we like the fact that Mr Read plans to simplify the business and focus on data and technology. In the reported period, the group merged two of its brand experience agencies and initiated the process of finding a strategic or financial partner for data giant Kantar Media. The 16 disposals made since the start of the year raised £704m, which has helped strengthen the balance sheet.
