£1.9bn wiped off advertising giant
And boss loses millions as WPP warns the world faces ‘tepid’ year
SIR Martin Sorrell is nursing a £32m headache after shares in WPP fell 8pc yesterday.
The advertising giant cut its outlook for the year ahead, citing a tough economic climate, which sent shares down 8pc, or 152p, to 1759p.
The tumble wiped £1.9bn off the advertising giant’s value and reduced Sorrell’s holding by £31.9m.
However, the 72-year-old tycoon’s 21m shares are still worth £369m, and he was paid £70.4m in 2015.
Sorrell said clients cutting costs had increased competition in the industry.
WPP lost contracts with VW and AT&T. Sorrell said: ‘There is low growth, low inflation, and clients are focusing on costs. It is a very difficult environment.’ The comments followed upbeat results for 2016, which included a 3.1pc lift in revenue to £14.4bn.
Profits rose 26.7pc to £1.9bn in a record year for the business. But 2017 started slowly, with sales up just 1.2pc in January, prompting WPP to lower its target to 2pc growth for the year. It blamed uncertainty around Brexit for weaker performance in the UK in the second quarter, despite receiving a boost from the fall in sterling since Britain’s vote to leave the EU.
Sorrell, a supporter of the Remain campaign, warned ‘tepid’ economic growth could hurt the business.
Big groups such as 3G Capital and Reckitt Benckiser are no longer splashing out on big advertising campaigns.
But Sorrell, whose wife Cristiana has just had a daughter, is pinning his hopes on the change of US administration.
He said the switch to Donald Trump would boost business through lower taxes, cuts to regulation and investment in infrastructure.
There may be trouble in store for Sorrell as his bumper pay, one of the biggest ever for a FTSE chief, sparked a shareholder revolt at last June’s annual meeting.
Neil Wilson, market analyst at ETX Capital, said: ‘Expect Sir Martin Sorrell to face the customary revolt over pay come the AGM.’ But in apparent attempt to stave off criticism, WPP said: ‘At a time when all external pressures seem to call for instant, shortterm responses, an understanding of the value of confidence, consistency and continuity has never itself been more valuable.’
Sorrell said the next 12 months would be crucial for Snapchat following its blockbuster listing this week.
WPP, which has 200,000 staff and is concerned about the rise in tech giants hoovering up its advertising income, spent just £73.5m of its clients’ money on Snapchat adverts.
Sorrell added: ‘It has to demonstrate quite clearly their approach results in increased effectiveness, increased sales, increased leads and better relationships with consumers.’