Critics savage ‘disgraceful’ profit slide

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SYDNEY, Friday: Market watchers have reacted furiously to news that WPP AUNZ’s profit has slid by 15.3% thanks to a “weak media spend market”, with interim ceo John Steedman predicting “further consolidation” in the Australasian market.

“This is a disgraceful performance,” wrote one contributor to the Mumbrella site. “There will be those who will be paid bonuses on costs savings through even more restructuring. When they have squeezed every last dollar they can make they’ll quietly disappear.”

Another wrote: “The group is mainly a huge mess outside of Ogilvy and a few other brands – and I’m not sure the new ceo is going to help much.”

‘Sinking Ship’ posted: “Iceberg dead ahead!”

Revenue for the first half of the year was down 2.6% per cent to A$405.6m, headline EBIT was down 12.6% to A$43.6m, while headline earnings per share of 2.7 cents were down 15.3% per cent. WPP posted a net profit after tax of A$22.6 million, down from last year’s A$26.8 million.

“The group is mainly a huge mess outside of Ogilvy and a few other brands.”

Steedman said: “We experienced a mixed performance across our portfolio of companies.

“Data investment management, public relations and specialist communications all achieved organic earnings growth in the first half, while the advertising and media segment faced headwinds due to global and local account losses, and a weak media spend market.”

Steedman said in order to deliver “integrated solutions” to WPP’s clients, the company’s strategy is to simplify the business, reducing its portfolio by 20 business through closer, merger of brands to enhance services to clients, or sale. This includes the recently announced proposed transaction to sell Kantar.

WPP forecasts a flat earning per share growth for the year, and based on trading results in the subsequent quarter are forecasting a decline in earnings per share of 5% to 10% for this financial year.

“The earnings of the company are traditionally weighted towards the second half of the year so we still expect a strong result for the second half,” said Steedman.

“We are however, conservative in our outlook given the heavy weighting of earnings in the second half.”

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