WPP Faces Profit Woes Amid AI Disruption and Economic Uncertainty

WPP has reduced its profit forecast due to trading issues and economic uncertainty, highlighting its struggles with AI-driven change and the need for new leadership following Mark Read's departure. Competitive pressures and a slowdown in key markets have been significant challenges for the group.

In a blow to investor confidence, British advertising giant WPP has downgraded its profit forecast for the year as it grapples with faltering trading conditions and the swift encroachment of AI-driven technological changes. The announcement comes amid growing economic uncertainty that threatens to exacerbate the group's challenges.

WPP is actively seeking a new chief executive to steer the company after Mark Read revealed his plan to exit the role in 2025, marking the end of a challenging era that saw the company's share price tumble and competition tighten. Struggling to retain key clients and win new business, WPP is feeling the pinch of intensified macroeconomic pressures that have forced a revision of its financial outlook.

The ad group, which recently lost its top spot to France's Publicis, anticipates organic revenue could fall by 3 to 5 percent, with operating margins declining between 50 to 175 basis points. The company's greater reliance on the Chinese market and the rise of AI, enabling clients to internally manage more marketing efforts, have amplified its challenges in recent months.

(With inputs from agencies.)