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Investing.com -- Shares of WPP (LON:WPP) tumbled more than 13% on Wednesday after the advertising giant slashed its full-year revenue and profit forecasts, blaming weaker-than-expected June trading, macroeconomic pressures, and a drop in net new business.
The London-based company now expects 2025 like-for-like revenue less pass-through costs to fall between 3% and 5%, down from earlier guidance of flat to a 2% decline.
Headline operating profit margin is forecast to drop by 50 to 175 basis points from a year earlier, excluding foreign exchange. The company had previously expected the margin to remain roughly flat.
“Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business," said Mark Read, chief executive at WPP in a statement.
"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,” Read added.
It also noted that some losses originally anticipated for 2026 had been pulled forward into this year.
For the first half of 2025, WPP expects like-for-like revenue less pass-through costs to decline by 4.2% to 4.5%, implying a second-quarter drop of 5.5% to 6%.
Total (EPA:TTEF) revenue less pass-through costs is projected to be about £5 billion. Headline operating profit is estimated between £400 million and £425 million, equating to a margin of 8% to 8.5%, down 280 to 330 basis points year-on-year, excluding currency effects.
Performance weakened in North America during the quarter, with the region expected to be down in the low single digits for the first half. Other regions also remained weak despite an easier comparison base.
The Global Integrated Agencies segment declined in the mid-single digits, with WPP Media and Ogilvy both impacted by reduced client spending and net new business.
WPP said severance actions taken in the second quarter at WPP Media are expected to generate more than £150 million in annualized gross cost savings.
The company said these actions will have a broadly neutral effect on full-year earnings.
Keeping its full-year margin will require further cost reductions balanced with continuing business investment, the company acknowledged. The company expects its margins to improve in the second half due to cost actions.