Rude awakening for WPP’s Read

WPP’S new boss has vowed to invest in creative talent and tackle its faltering operations to revive the advertising giant’s fortunes in the face of increased competition from Google and Facebook and customers cutting spending.

Mark Read, confirmed on Monday as Sir Martin Sorrell’s successor as chief executive, said a strategy review was underway “addressing our structure, our underperforming operations, particularly in the US, and how we position the company for the future”.

He promised to update investors by the end of the year, buoyed by the first quarterly like-for-like sales growth for over a year in the second quarter. But shares fell 80p to 1196½p, wiping £1billion from its market value, amid concern over WPP’s profit margins and slowdown in North America, its biggest market, where the revenue drop grew to 3.3 per cent from 2.4 per cent over the previous three months.

WPP’s half-year headline pre-tax profit fell 7.4 per cent to £735million on 2.1 per cent lower revenue of £7.49billion.

Read pointed to success in winning or growing business with clients including Adidas, Hilton, Shell, T-Mobile and Mars, while efforts to simplify had been stepped up.

He said: “My focus will be on invigorating and returning the business to stronger, sustainable growth. We need to invest in creative talent. Sometimes, faced with cost cuts, you take the wrong people out. So we need to make sure we have the best business in those areas.”

Interactive Investor’s Richard Hunter said: “WPP is a sprawling mass of different businesses, although there has been a disposal of 15 of these so far, which should both focus the company and take some pressure away from a net debt figure which remains stubbornly high.”

Liberum’s Ian Whittaker expects Read to oversee “significant evolution”, which could include disposal of parts of its market research assets, rather than a break-up.