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LONDON (Alliance News) - WPP PLC on Thursday reported a drop in third quarter revenue due to slowdown in its North American businesses and said it intends to sell some stake in its market research unit Kantar Group.
Shares in the advertising company were down 16% at 890.20 pence each in morning trade, the worst performer in the FTSE100 index.
The company reported 0.8% fall in revenue for the three months to the end of September to GBP3.76 billion from GBP3.79 billion for the same period the year before. On a constant currency basis, revenue rose by 1.2% and life-for-like revenue by 0.2%, with acquisitions providing 1.0% growth.
Revenue for the first nine months of 2018 declined by 1.6% to GBP11.25 billion from GBP11.44 billion. At constant currency, however, revenue rose by 2.3% and 1.1% on a like-for-like basis. Acquisitions contributed 1.2% growth in the period.
WPP said its results reflected the stronger pound in the first half, mainly against the US dollar, and then against other currencies in the third quarter.
Revenue for the third quarter particularly declined in the company's North America businesses, down 1.5% on a reported basis, as client losses and spending reductions led to a slip in WPP's media and data investment, health & wellness and communications businesses.
Due to the slow down in the third quarter, WPP has adopted a more cautious stance for the full year. It estimates like-for-like revenue less pass-through costs growth to be down 0.5% to 1.0% and operating margin to revenue less pass through costs to be down 1.0 - 1.5 margin points.
WPP, which plans to remain as a shareholder in Kantar, said it has received unsolicited expressions of interest for the unit.
"There is a significant opportunity to develop Kantar into the world's leading data, insights and consulting company. We believe in the potential for Kantar but given our many priorities, we need to make tough choices and we believe that the best way to unlock this potential is with a strategic or financial partner. The board has approved a formal process to review the strategic options that will maximise share owner value," said Chief Executive Officer Mark Read.
"As previously stated, our industry is facing structural change, not structural decline, but in the past we have been too slow to adapt, become too complicated and have under-invested in core parts of our business. There is much to do and we have taken a number of critical actions to address these legacy issues and improve our performance," Read added.
