WPP issues shock profit warning as revenues now set to plunge up to 5%

WPP has surprised investors with an unscheduled trading update in which it made steep cuts to already-weak revenue and profit forecasts after a “deterioration” during the course of Q2.

Revenues less pass-through costs are now expected to fall between 5.5% and 6% in Q2, following a 2.7% drop in Q1, and profit margin for the first half will be down between 2.8% and 3.3%.

WPP blamed “tougher macro” economic conditions, “weaker new business performance” and “one-off” factors including “severance action at WPP Media” because of a major restructuring of the division, previously known as Group M.

As a result, WPP expects annual revenues to plunge between 3% and 5%, markedly worse than the drop of between 0% and 2% that it forecast in February.

Annual profit margin is also set to slump by between 0.5% and 1.75% versus a year earlier.

WPP’s share price tumbled as much as 15% in early trading to about £4.50 — a further blow for the already battered stock. It has almost halved in value, falling about 45%, since the start of 2025.

It is highly unusual for an agency group to release its financial numbers outside regular scheduled quarterly results and it is typically because there has been a material change to investor expectations. WPP will still report Q2 results as planned on 7 August.

Mark Read, the chief executive, who previously announced on 9 June that he was stepping down, admitted on a call with analysts that it was “disappointing to have this update” but the company “wanted to be clear” with investors “as soon as we could”.

He said “the issues have primarily been in WPP Media” and also at Ogilvy, which has seen a hit to “project” work.

“Clients are cautious,” Read said, explaining there was a dual effect as concern about “the macro” was also impacting the new-business pipeline, where the company was seeing “fewer opportunities” and they “tend to be smaller”.

WPP did not mention explicitly whether the fallout from US president Donald Trump’s tariffs was directly affecting clients’ behaviour. Consumer packaged goods and automotive were among the sectors that were hit, WPP said.

Joanne Wilson, the chief financial officer, said the loss of the Coca-Cola North America media account in March was already hitting the company in Q2 and Read added the loss of the Mars media account in June, which he had initially expected only to impact WPP’s performance in Q1 2026, would now hit in Q4 2025 because of client decisions.

Wilson said headcount dropped 3.5% in the first half of the year – a reduction of an estimated 3800 roles. WPP employed 108,000 at the end of 2024.

She added the restructuring costs associated with the WPP Media shake-up should not hit profitability further in the second half of the year, with Read adding some of the “savings” should start to support margins.

However, Wilson warned she would be “very cost-focused, particularly around our discretionary spend” for the remainder of the year.

Read’s formal statement to the stock market painted a tough picture. “Since the start of the year, we have faced a challenging trading environment, with macro pressures intensifying and lower net new business,” he said.

“While we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated and we expect this pattern of trading in the first half to continue into the second half.

“As a result, we are updating our guidance for the full year and reducing our expectations on LFL [like-for-like] revenue less pass-through costs growth to -3% to -5% (from flat to -2%) with a year-on-year decline in headline operating profit margin of 50 to 175 bps [basis points] (vs around flat previously).

“Our focus remains on ensuring the right balance between investing in the business for the long-term and continuing to reduce structural costs, while taking appropriate actions to respond to the current trading environment.”

Read said Brian Lesser, the chief executive of WPP Media, would speak to investors as part of the Q2 results presentation in August.

Read is due to retire from the board by 31 December and the company is searching for his successor.

Campaign reported yesterday (8 July) that WPP was “closing in on its new CEO” and a decision by the board was set to come “sooner than expected”.

WPP is facing its third year of worsening performance after growth of 0.9% in 2023 and a decline of 1% in 2024. That contrasts with some rivals, notably Publicis Groupe, which has had annual growth of between 5% and 6% in recent years and is expecting to grow again in 2025.