Uber and HSBC wins help trading improve at ad group WPP

Underlying net sales were down by 5.1% in North America, compared with a 10.2% drop in the second quarter, and down 6.5% in Britain, after a 23.3% plunge in the previous quarter. As a result, the company expects to deliver a full-year result within analyst forecasts of a drop between 8.5% and 10.7% in like-for-like net sales, with a midpoint of down 9.6%.

Client wins with Uber, Alibaba and HSBC helped the world's biggest advertising company WPP deliver an improvement in third-quarter underlying trading, particularly in Britain and the United States. The British owner of the Ogilvy, Grey, and GroupM agencies, already rebuilding after several years of tech-led turmoil in the ad industry, is now recovering from the abrupt cancellation of spending by companies desperate to save cash in the pandemic.

While businesses in consumer packaged goods, pharmaceuticals, and technology have increased their spending, those in the automotive and luxury sectors are stabilizing, while the travel and leisure industries remain weak. Overall, underlying net sales fell by 7.6% in the three months to the end of September, an improvement on the 15.1% drop in the previous three months, and WPP said it remained on track to cut costs and hit its downgraded outlook.

"Given the tightening of COVID restrictions around the world and uncertainty in the global economic outlook, we remain cautious about the pace of recovery," Chief Executive Mark Read said on Thursday. WPP secured $1.6 billion of new business and said late on Wednesday it had extended its ties with Walgreens Boots Alliance, one of the biggest pitches of the year.

Citi analysts said the improvement was all the more impressive because, unlike peers Publicis, Omnicom and IPG, WPP has a lower exposure to the United States and has also not benefited from buying assets of late. Underlying net sales were down by 5.1% in North America, compared with a 10.2% drop in the second quarter, and down 6.5% in Britain, after a 23.3% plunge in the previous quarter.

As a result, the company expects to deliver a full-year result within analyst forecasts of a drop between 8.5% and 10.7% in like-for-like net sales, with a midpoint of down 9.6%. That compares with a range midpoint given in August of down 10.75%. Analysts said the results were ahead of expectations, but traders said the shares fell to a month low, down 3.5%, on the cautious outlook.

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