WPP boss says US tariffs have not yet massively hit client spending
Mark Read said the FTSE 100 group, one of the world's largest advertising agencies, was upholding its annual guidance amidst the 'challenging economic environment.'
He acknowledged the tariffs would 'impact a number of our clients' even if WPP is not 'directly affected' by them.
'At this point, we have not seen any significant change in client spending,' observed Read, who succeeded Sir Martin Sorrell as WPP's boss seven years ago.
His remarks came as WPP declared its revenue declined by 5 per cent to £3.2billion during the first quarter, and 0.7 per cent on a like-for-like basis.
Reported turnover in its public relations arm plunged by 39.5 per cent to £167million following the $1.7 billion sale of its majority stake in communications consultancy FGS Global to private equity giant KKR.
Reassurance: WPP's chief executive, Mark Read (pictured) has said recent US tariff measures had not led to a 'significant change' in client spending
At the same time, like-for-like sales minus pass-through costs shrank by 2.7 per cent to £2.5billion, partly due to customer assignment losses in the UK, Europe and China.
Trading in Britain was also affected by pressure on project-based spending in the healthcare and automotive industries.
Yet the company noted that its 25 biggest clients achieved growth of 2.5 per cent thanks to a 'robust performance' in the consumer packaged goods sector and a 'further improvement' in technology and digital services firms.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, warned that if tariffs lead to an economic slowdown and WPP's clients have to cut costs, 'advertising budgets will likely be one of the first things on the chopping block.
'WPP hasn't seen client behaviours change yet in response to tariffs, but the picture can change quickly.'
The business expects headline operating margins to flatline this year, alongside a possible fall in like-for-like revenue less pass-through costs of up to 2 per cent.
By comparison, French rival Publicis Groupe, which owns Saatchi & Saatchi, forecasts annual organic sales growth of between 4 per cent and 5 per cent.
Its net revenue rose by 9.4 per cent in the first quarter, boosted by gaining major new business from the likes of Subway, Santander, and Coca-Cola.
Among WPP's recent client wins have been L'Oreal, Levi Strauss, Italian insurance giant Generali, and video games maker Electronic Arts.
WPP shares were 0.6 per cent down at 563p on early Friday afternoon, meaning they have contracted by around a third since the year started.
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