Shares in WPP PLC's dropped after the British advertising agency reported a lower headline profit margin in the first half and headline EPS that missed estimates.
The company reported headline profit before interest and tax margin of 13.3% in the first half, down 0.5 percentage point year over year. Headline EPS decreased to 42.6 pence from 45.4 pence in the year-ago period and was lower than S&P Global Market Intelligence's consensus normalized EPS estimate of 44 pence. Headline PBIT was £820.7 million for the period, down 7.0% on a yearly basis from £882.0 million.
"Our review of strategy is underway, addressing our structure, our underperforming operations, particularly in the United States, and how we position the company for the future. We will provide an update by the year-end," CEO Mark Read said.
The advertising giant named Read as CEO on Sept. 3, replacing Martin Sorrell, who resigned in April amid an investigation over his alleged misuse of company assets and personal misconduct.
WPP shares dropped 6.78% in London as of 8:23 a.m. local time Sept. 4.
The company reported profit attributable to equity holders of £672.4 million, or 53.4 pence per share, for the first half, up from £596.1 million, or 46.6 pence per share, in the same period last year. WPP said its prior-year figures were restated due to the adoption of new accounting standards.
WPP said it generated net exceptional gains of £114.6 million in the first half due to a gain on the sale of its minority stake in application software company Globant SA partly offset by exceptional losses and restructuring costs, compared with a net exceptional loss of about £300,000 in the year-ago half.
Billings were down 1.0% year over year to £26.66 billion from £26.92 billion. Revenue fell 2.1% year over year to £7.49 billion from £7.65 billion due to a negative impact of 5.0% from currency headwinds. On a like-for-like basis, which reflects growth at constant currency exchange rates and excludes the effects of acquisitions and disposals, revenue grew 1.6%.
For full year 2018, the company expects its headline PBIT margin to be similar to the decline of 0.4 percentage point in the first half on a like-for-like basis. It expects like-for-like revenue growth to be similar to the first half and like-for-like revenue less pass-through costs growth to be similar to the 0.3% growth in the first half.