Media group WPP has reported that it expects the headline operating margin will decline by 50 to 175 bps, after a “deterioration in performance” in quarter two.
In an update issued today (9 July), the agency reported that it expected headline operating profit to fall to £400 million to £425 million due to the “lower revenue less pass-through costs” and “severance action at WPP Media”.
It anticipates that revenue less pass-through costs will decline to -5.5% to 6.0% in Q2.
WPP has changed its guidance for its like-for-like 2025 revenue pass-through costs to -3% to -5%, highlighting that although the figures were impacted by one-off factors, they fell below what was expected.
Mark Read, chief executive officer of WPP, said: “Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business. While we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated and we expect this pattern of trading in the first half to continue into the second half.
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The firm saw a quarter-on-quarter deterioration in North America and it expects it will be down to low single digits across H1. It added that other regions have also remained weak despite an “easing comparative”.
Since the update, the firm has seen its share prices tumble by over 16% to £4.42 as of the time of writing.
WPP said it will update its other 2025 financial indicators in August.
Read added: “As a result, we are updating our guidance for the full year and reducing our expectations on LFL revenue less pass-through costs growth to -3% to -5% (from flat to -2%) with a year-on-year decline in headline operating profit margin of 50 to 175 bps (vs. around flat previously).
“Our focus remains on ensuring the right balance between investing in the business for the long-term and continuing to reduce structural costs, while taking appropriate actions to respond to the current trading environment.”
