Shares in WPP PLC (LSE:WPP) slipped to their lowest since the financial crisis after the advertising group confirmed a weak first-half performance, marked by falling revenues, declining margins, and a halved dividend, reinforcing investor concerns after being largely flagged in advance.
The FTSE 100-listed company reported like-for-like net sales falling 4.3% in the first half, including a 5.8% decline in the second quarter.
Adjusted operating profit margin narrowed by 2.9 percentage points to 8.2%, matching analyst expectations, while adjusted free cash flow fell sharply.
The group declared an interim dividend of 7.5p per share, down from 15p last year.
The figures were in line with WPP’s trading update in early July, and UBS analyst Adam Berlin noted there were "no further operating downgrades" to guidance.
Even so, Berlin flagged the "key negative" of deteriorating cash flow and highlighted ongoing challenges across WPP’s core divisions.
Organic net revenue at GroupM, WPP's media investment arm, fell 4.7% in Q2, reversing a slight decline in Q1, while integrated creative agencies dropped 7.2% and PR declined 7.8%.
Analysts at AJ Bell described the results as "a really weak set of numbers – the last under departing CEO Mark Read,” adding that “rebasing the dividend takes an unpopular decision out of the hands of incoming CEO Cindy Rose.”
They also pointed to WPP’s long-standing issues, including being outplayed by tech advertising behemoths like Facebook and Google, and lagging rival Publicis, which bagged the Coca-Cola account earlier this year.
"WPP is now so consumed by its own problems this wider relevance has diminished,” AJ Bell said, warning shareholders that the company’s future now hinges on Rose’s ability to “help WPP recover and thrive in a new advertising landscape.”
The shares dropped 5% in early trading and later saw this deficit reduced to 2.6% at 391.5p.