Shares in WPP dropped like a stone on Thursday morning as the business revealed that the first year of its turnaround plans had not produced quite what analysts were looking for.
The advertising giant said its most-watched measure of revenue, which removes pass-through costs, fell 0.3% to £10.8 billion.
On this it made profit before tax of £982 million, a 22% drop.
Shares fell by not much less, dropping as much as 17% at one point on Thursday morning. They later regained some ground to be 14% down.
Like-for-like revenue dropped 1.9% in the last four months of the year, a worse result than investors had been hoping for.
WPP also said that revenue will remain flat in 2020, even before taking into account the possible impact of coronavirus.
David Madden, an analyst at CMC Markets, said: “WPP shares are down today after the firm revealed a 1.9% fall in like-for-like (LFL) net sales in the last quarter, and the group now expects annual LFL net sales to be flat on the year – which would be lower than previous forecasts.”
Last year was the first of a three-year turnaround plan which was launched by WPP’s new management after founder and former chief executive Sir Martin Sorrell quit amid a scandal over whether he spent company money on a prostitute.
Earlier this week, Sir Martin announced that he was divorcing his second wife, Cristiana.
Despite investors’ disappointment, chief executive Mark Read saw a positive side to the results.
“Thanks to the hard work of all our colleagues we have made substantial progress in a short period of time,” he said.
“Our new offer of creativity powered by technology has resonated with clients, as we’ve seen in good retention rates and important wins.”
He added that the second half was better than the first.
Chris Daly, chief executive of the Chartered Institute of Marketing, said: “The opportunity for WPP is significant, particularly given that marketing budgets have increased for the first since since January 2019, according to the latest IPA Bellwether Report.
“However, to take advantage of this, the agency must do better to convince investors of its ability to keep pace with dynamic shifts in the industry.”
The 2020 outlook does not take into account the potential effects of coronavirus, WPP said.