WPP returns to growth in Q3 with 0.5% revenue increase

Best quarterly performance since start of 2017.

Read: expecting 'twists and turns'
Read: expecting 'twists and turns'

WPP said it showed "substantial progress" as it moved back into growth in the last three months, posting a 0.5% increase in organic revenue and ending four consecutive quarters of decline.

Revenue grew 0.7% in the third quarter when 100% of Kantar is included – WPP is selling off a majority stake – and the performance contrasts with a 2.8% slump in the first quarter and a 1.4% drop in the second quarter.

In another sign of progress, the biggest division, global integrated agencies, which includes all of the flagship creative and media shops, moved back into growth in the third quarter.

"This improvement came largely from North America, the United Kingdom and continental Europe, with Wunderman Thompson, VMLY&R and Grey showing significant improvement compared with the first half. Following the merger, VMLY&R grew in the third quarter both globally and in the United States," WPP said.

WPP shares rose about 4% to roughly 950p on the strength of the third-quarter results, but remain below the £10 level at which they have traded for most of the past six months and half the £19 peak in 2017.

The British agency group is still facing a third consecutive year of revenue decline and refused to upgrade its forecast for this year.

Mark Read, who took over from Sir Martin Sorrell as chief executive in September 2018, said the return to growth was "encouraging", but warned that "there will be twists and turns along the way" to "sustainable" recovery.

Some big account losses such as Ford’s US creative business in October 2018 are also yet to be fully felt.

WPP’s operation in North America continues to shrink, although the decline eased to 3.5% in the third quarter. The UK grew 3.1% and western Europe posted its first quarter of growth this year, up 1.7%.

The rest of the world grew 4%, with India up 15%, but some parts of Asia-Pacific were "difficult", with China declining and Australia and New Zealand "below average".

WPP’s performance will be a boost to the wider agency sector after Publicis Groupe spooked investors when it reported a 2.7% decline on 10 October.

Since then, Omnicom, Interpublic and now WPP have all reported quarterly growth.

Read said: "In the last 12 months, WPP has taken decisive action and made substantial progress on many fronts: we have fewer, stronger agency brands; new leadership in many of our companies; enhanced central teams supporting our companies; and a renewed commitment to creativity, powered by technology."


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