WPP full year boosted by weak pound; sees slower 2017

The weak pound helped advertising giant WPP lift reported full year pre-tax profits by 26% to £1.8bn, although revenues slowed in the US and UK in the second half leading to a cut in expectations for 2017 revenue growth to 2%.

Billings were up 16% to £55.2bn and revenues 17.6% to £14.3bn. The final dividend came in at 37.05p a share for a total of 56.60p, a rise of 26.7%.

WPP said all its trading regions reported like-for-like revenue growth, led by Western Continental Europe, Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe.

It added that January 2017 like-for-like revenue was up 1.5%, ahead of budget, with like-for-like net sales, up 1.2%, ahead of budget and against a stronger comparative last year. Growth for 2017 has been pencilled in at 2% against 3.1% in 2016 and 3% consensus..

"Given continued tepid economic growth and recent weaker comparative net new business trends, the budgets for 2017, on a like-for-like basis, have been set conservatively at around 2% for both revenue and net sales, but with a headline operating margin target improvement on net sales of 0.3 margin points, in constant currency," WPP said.

“The prospects in the UK are more mixed as the post-Brexit vote scenarios will play out over the next two years and uncertainties about the possible outcomes increase,” WPP said.

“The four leading Western Continental European economies, Germany, France, Italy and Spain, let alone the Netherlands and Greece, also all face political uncertainty, although Germany and Spain are strengthening economically.”

Mike van Dulken of head of research at Accendo Markets said the slow start to the year was of "real concern".

"This suggests a worrying continuation of what it terms a “tepid” macro environment, clients “grinding it out in a highly competitive game” and a cooling of positive tailwinds. Not really what investors want to hear when shares are just shy of all-time highs," van Dulken said.

"Investors have clearly taken an opportunity to take profits off the table, sending the shares below 1820p 2-month support. However, 1792p is serving as support thanks to the 100-day moving average doing its bit. For now. Thereafter, it’s back to a 2016 rising channel at 1740p, its floor shared with the traditionally even more supportive 200-day moving average."

WPP shares were 6.4% lower at 1788p at 1015 GMT.