WPP PLC (LSE:WPP) shares tumbled 7.3% to 785.80p after it lowered its full-year outlook due to reduced spending by US firms as it reported profit halved in the first half of 2023.
The warning came a week after S4 Capital, Sir Martin Sorrell's advertising group, plunged after it too sounded the earnings alarm.
The advertising giant now expects full-year like-for-like growth of 1.5-3.0%, down from previous guidance of 3-5%, although headline operating profit margin of around 15.0% is higher than the 11.5% reported in the first half.
The lower outlook is "unwelcome but not wholly surprising", according to Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Chief executive Mark Read said: “Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects.”
Revenue in the six months to 30 June 2023 rose 6.9% to £7.22 billion from £6.76 billion a year ago but pre-tax profit slumped 51% to £204 million from £419 million. EPS fell 55% to 10.3p from 22.7p.
In the second quarter, ex-US growth accelerated to mid-single digits, with China growing albeit less strongly than expected.
UK revenue grew 9% but North America declined 4.1%, on the lower tech spend.
WPP said new business was solid with $2.0 billion net new billings booked in the first half while the pipeline of potential new business is larger than at the same point in 2022.
It said it remains on track to deliver at least £450 million of annual savings this year over a 2019 base.
WPP said full-year results will include a £220 million impairment charge following a review of its property portfolio resulting in a consolidation of office space.
The dividend was held at 15.0p.