WPP: Share Buy Backs and M&A holding back their profits

WPP the worlds largest advertising holding company are down. The share price has dropped 15% on the year. Like for Like sales are down 1.1% to $3.6bln globally. This has cause a cut in profit guidance for the year. Nick Batsford, CEO of Core London states that these large companies are almost trading like utilities and that they surely cannot continue to grow exponentially as they currently are.

Sir Martin Stuart Sorrell, the chief executive officer of WPP PLC had a very frank and honest speech. He believes that there is a very clear cut reason as to the poor performance. Technology and Healthcare were holding the business up. WPP has a fantastic relationship with Google and Facebook. However companies of their size must deliver share holder value, and this is being done by a scheme or share holder buy backs and M&A activity. This leaves the companies with paper thin profits. More over this paper thin profit margin means that there is a reluctance in spending money on advertising. This will remain the case for the rest of the year.

On a positive note, David Buik, Senior Market Commentator for Panmure Gordon moves on to tell us that in recent data releases the UK (despite Brexit difficulty) and Europe are the best performing regions in the digital market.

Further Information

You can see more from David Buik on Core Finance by using this link: http://www.corelondon.tv/?s=david+buik

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