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WPP returned to net sales growth in the third quarter but the advertising agency warned of continued economic uncertainty and a tougher end to the year.
The London-based marketing group said like-for-like revenue when removing pass-through costs — the fees paid to external suppliers — was up slightly in the third quarter by 0.5 per cent to £2.8bn.
However, WPP said this measure for the full year would be between 1 per cent lower to flat, warning that recent client wins would only start to benefit the company next year. Shares in the group rose almost 4 per cent to 804p, taking its market capitalisation to £8.7bn.
Revenue growth in the US and western Europe was offset by a fall of more than a fifth in China, which WPP blamed on client losses and “persistent macroeconomic pressures impacting both our media and creative businesses”.
UK revenues were flat for the quarter. Mark Read, WPP chief executive, said consumers were being cautious ahead of next week’s UK Budget, which had caused a similar slowdown in marketing activity. He said the long wait for a Budget widely expected to bring tax rises had “not helped”.
“It has been a little bit wait and see,” he said, adding that while “people are expecting tougher times ahead financially”, clarity on the Budget “will make things easier to see”.
Read said US consumers were also feeling pressure, especially in the lower income brackets, but that the country’s economy remained strong ahead of the election next month.
WPP this summer was forced to downgrade its revenue forecasts for the rest of the year, but Read said the “momentum” behind the company was better given recent successes in gaining and retaining clients.
“It’s an important first step to demonstrate the competitiveness of our offer,” he said, pointing to the adoption of AI in its businesses and services offered to clients.
He predicted that using AI tools would make WPP staff “20 per cent more productive”, but said the impact of the technology on job numbers was not clear as he expected that AI would also “make more work”.
“We are encouraged by progress during the quarter, but with recent new business wins primarily impacting 2025 and continuing macroeconomic pressures, our expectations for the full year remain unchanged.”
Analysts at Shore said the company had shown “a positive revenue performance, progress against strategic goals, client wins and retentions and a reiteration of full-year guidance”.
But they added that “WPP’s performance, although improved, remains some way below best in class” rivals such as Publicis.
The planned disposal of a majority stake in corporate public relations firm FGS Global to KKR is on track to close in the fourth quarter, with expected net proceeds of about £604mn.
WPP, with its partner Bain Capital, is also looking to sell Kantar Media, a division of the Kantar market research group that runs the UK’s TV audience measurement system. The sale has attracted interest from a number of private equity groups, according to people close to the talks.
