LONDON (Alliance News) - WPP PLC on Tuesday said its new chief executive, Mark Read, intends to return the business to growth after seeing a decline in revenue in the first half of 2018.
The stock was trading 7.0% lower on Tuesday morning at 1,187.50 pence per share, the worst performer in the FTSE 100 index of London large caps.
On Monday, advertising company announced it had promoted Mark Read, the head of its digital division, to CEO. The appointment was expected, as it had been reported by several media outlets.
Read - who has been with WPP for nearly 30 years - had been acting as joint chief operating officer alongside Andrew Scott since mid-April when former CEO and founder Martin Sorrell resigned.
Sorrell left WPP following the conclusion of an investigation into what WPP called "an allegation of misconduct" which it said did not "involve amounts that are material" to the company.
"As chief executive, my focus will be on invigorating our company and returning the business to stronger, sustainable growth," Read said on Tuesday.
WPP posted a pretax profit for the six months to the end of June 8.6% higher at GBP846.5 million compared to GBP779.2 million reported a year earlier, despite revenue dropping 2.1% to GBP7.49 billion from GBP7.65 billion.
However, on a constant currency basis, revenue grew by 2.9%, reflecting the strengthening of the pound in the first half, primarily against the dollar.
On a like-for-like basis, which excludes the impact of acquisitions and currency, revenue was up 2.4% in the second-quarter, a significant improvement compared with first-quarter growth of 0.8%, giving 1.6% for the first-half.
Billings were down 1.0% to GBP26.66 billion in the first-half compared to GBP26.92 billion the year before, although up 4.1% at constant currency. WPP said it returned to a strong performance after winning net new business billings of USD3.2 billion during the period.
Profit growth was helped by a reduction in general & administrative expenses, which fell by a third to GBP432.1 million from GBP643.7 million.
In addition to that, WPP generated one-off gains of GBP188.5 million, primarily relating to the gain on the sale of its investment in Globant SA.
However, these gains were partly offset by restructuring costs of GBP45.5 million and the company's share of associate company exceptional losses of GBP28.4 million.
That gave a net exceptional gain of GBP114.6 million in the first-half, compared to GBP300,000 net exceptional loss reported a year ago.
Headline pretax profit, meaning from normal business only, was down 7.4% to GBP735 million from GBP793 million the year prior and down 2.5% in constant currency.
WPP maintained its interim dividend at 22.7 pence per share.
Looking forward, the company said like-for-like revenue in July grew by 2.1%, in line with the first-half growth rates.
WPP said it plans to update the shareholders on its new strategy before the year-end. The update will reveal the actions that will be taken to better position the business for growth and to address under-performing units, the company said, as well as detail any restructuring costs.
"The second quarter of 2018 was WPP's first quarter of like-for-like growth since the first quarter of 2017, and the company has performed strongly in terms of winning and retaining business over the period," said Read.
"Our review of strategy is underway, addressing our structure, our underperforming operations, particularly in the US, and how we position the company for the future," added Read.