FTSE 100 advertising firm WPP (WPP) tops the FTSE 100 leaderboard, up 7.8% to 889.8p, as both its 2018 numbers and 2019 guidance are a little bit better than feared.
Restructuring costs saw pre-tax profit fall by almost a third to £1.46bn but sales were down 0.4% against guidance for a 0.5% fall, operating margins fell 1.1% versus the expected 1% to 1.5% decline and earnings per share came in at 108p ahead of consensus at 106p. As pledged the dividend is held at 60p.
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And nearly 12 months on from the acrimonious departure of founder Martin Sorrell, Mark Read who was appointed on a permanent basis last autumn says there are 'promising' initial signs from a three-year turnaround plan announced in December and which we reported on here.
Liberum analyst Ian Whittaker says 2019 commentary 'was more positive than would have been expected' and adds: 'For 2019, the guidance is for organic net sales of -1.5% to -2%, which would have been in line with expectations (we have -1.7%) but the hit to operating margins looks less than would have been feared - WPP is guiding ex-the impact of leases (so like for like basis), margins down 100 basis points year-on-year for 2019. We had been expecting a hit of 170 basis points year-on-year so this is a significant relief.'
PLAYING THE EXPECTATIONS GAME
AJ Bell investment director Russ Mould says the results suggest 'chief executive Mark Read has at least got some skill at expectations management'.
'The harder bit might be achieving a tangible improvement in the advertising company's fortunes, after all the company is still expecting revenue and margins to decline this year amid the loss of several major clients,' he adds.
'Read's task is made even more difficult by the uncertain economic backdrop. Advertisers are particularly exposed to fluctuations in the economy because companies will increase spending on ads when they are feeling positive and scale back during tougher times.'
