WPP, the world’s largest advertising group, increased its annual net sales outlook on Friday after an upbeat second-quarter.
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WPP raised its annual net sales outlook on Friday, boosted by strong client spending in the second quarter, but shares in the world’s largest advertising group slid nearly 8% after a sustained climb over the past month.
The results come as investors and analysts look to gauge how advertising will perform against a backdrop of high inflation and slowing global economic growth.
Shares in WPP were down 7.8% to 822.60 pence on the London Stock Exchange by 0805 GMT. The stock has climbed 17.2% over the past one month, compared with a 6% advance for the FTSE 100.
Britain’s WPP said like-for-like net sales from the technology sector grew 12% in the first half, helped by a range of new deals and expansions to existing partnerships.
WPP, owner of the Ogilvy, Grey and GroupM agencies, said the travel sector was also rebounding strongly, with a 23% growth in the first half, although sales still remained below pre-pandemic levels.
Chief Executive Mark Read said he was not particularly worried about a forecasted recession in Britain, pointing to client spending holding up across industries and markets. The UK accounts for 13% of WPP’s overall business.
“We’re yet to see any major impact on advertising spend,” he said in an interview. “We are in very close contact with our clients on spending patterns and their investments and consumer spending has held up around the world surprisingly well.”
WPP now expects like-for-like net sales to grow 6%-7% in 2022, up from an already upgraded forecast of 5.5%-6.5%.
The forecasted increase was less than the 8.9% jump in its main net sales measure – like-for-like revenue less pass-through costs – during the first half of the year, implying a slower pace of growth in the latter half.
Last month, WPP rival Publicis raised its full-year guidance after beating first-half organic revenue growth and core profit margin expectations.