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WPP reports trading uptick as board faces questions about Sorrell
WPP reported a slight improvement in business as the board of the world's biggest advertising group faced questions from shareholders about the departure of founder Martin Sorrell.
In a trading update alongside its annual general meeting WPP said reported revenue less pass-through costs fell 5% to £3.97bn in the first four months of the year.
Excluding currency swings, revenue on that basis rose 1.1% compared with 1% in the first quarter. Like-for-like revenue after pass-through costs rose "marginally", improving on the 0.1% fall in the first quarter. WPP shares rose 1.2% immediately after the statement was released but were down 0.2% at £12.44 at 14:14 BST.
The statement from chairman Roberto Quarta stuck to financial performance and made no mention of Sorrell's departure in April amid allegations of personal misconduct that the former chief executive denied.
Quarta and the board answered questions from shareholders at the meeting in London following revelations that Sorrell was accused of paying for sex using WPP's money. An independent inquiry is reported to have found no proof of misuse of company funds.
Some big shareholders are unhappy about the terms of Sorrell's departure, including multimillion-pound payments he may receive and his rapid setting up of a rival advertising company called S4.
Investors are also restless about Quarta's handling of the matter after WPP refused to disclose the allegations against Sorrell. However, only 29.5% of votes withheld support from WPP's pay report and 16.6% declined to support Quarta's re-election to the board.
The AGM wrapped up in little over an hour after individual shareholders asked for assurances that "obscene" levels of pay would not be repeated and whether the former boss would use his knowledge of WPP against the company.
Quarta said: "On the issue of the non-compete ... Sir Martin said he had no intention of competing and said his new vehicle is a peanut that would not compete against a global company like WPP", according to a Guardian tweet. Chief operating officer Mark Read told a shareholder WPP could succeed without Sorrell and "we need to find a new beating heart for the group".
North America was WPP's weakest performing region where revenue less pass-through costs fell 2.4% in the first four months of the year. The UK weakened from the first quarter with advertising and brand spending down. Revenue less pass-through costs rose in Western Europe and other markets including Asia and Latin America.
Quarta said: "For the remainder of 2018, the focus remains on improving revenue less pass-through costs growth and concentrating on meeting our operating margin objective, by managing absolute levels of costs and increasing our cost flexibility, in order to adjust our cost structure to significant market changes."
Sorrell's departure after more than 30 years from the company he built from scratch followed a series of sales warnings that tested the patience of investors already unhappy about his dominance of WPP. Sorrell blamed short-sighted budget cuts by big consumer goods advertisers but sceptics argue WPP's business is being eroded by the rises of online platforms including Facebook and Google that cut out expensive ad agencies.