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Investing.com -- WPP (NYSE:WPP) (LON:WPP) reported a decline in first-quarter revenue as weakness in its European operations weighed on performance, though the company said it has not yet seen any client response to the recent wave of U.S. tariffs.
The British advertising group said revenue, excluding pass-through costs, slipped 2.7% year-on-year to £2.48 billion ($3.3 billion), falling short of the £2.54 billion average estimate from analysts surveyed by Bloomberg.
The shortfall was mainly driven by weakness in Western Continental Europe and the U.K., while North America outperformed expectations. The company attributed the result to the timing of account wins and losses as well as ongoing macroeconomic pressures, which are expected to persist into Q2.
WPP expects performance to improve in the second half (H2) of the year.
Despite the softer results, WPP reaffirmed its full-year guidance. CEO Mark Read noted that clients have yet to react to the global tariffs imposed by U.S. President Donald Trump, which have unsettled financial markets in recent weeks.
WPP had previously cautioned that sales growth in 2025 would be limited, with Read warning earlier this year that the uncertain political backdrop could prompt clients to rein in spending.
Following the trading update, JPMorgan analysts lowered their full-year earnings forecast for WPP by around 2% to 80p, citing foreign exchange impacts. They also reduced their December 2026 price target (PT) from 750p to 730p.
"While our PT suggests medium-term upside, risks (to the upside and downside) are amplified by leverage and we believe the shares will struggle to outperform until there is more visibility regarding: tariff impacts; the H2 growth acceleration and margin improvement," JPMorgan analysts said.
The analysts are also closely monitoring the Mars review, which they believe "will determine whether or not WPP can deliver on its potential growth in 2026."
Mars, a consumer goods giant and a key WPP client, is currently conducting a global review of its advertising agency arrangements, raising the possibility of further setbacks for the British ad group.