Marketing giant WPP has seen shares tumble after warning over profits following weaker-than-expected trading as clients cut spending amid global economic uncertainty.
The group said its performance had worsened throughout the second quarter, with June behind forecasts.
Clients are pulling back their marketing spend and the group is also seeing weaker-than-expected new business wins.
The FTSE 100 firm slashed its guidance for full-year net sales, saying it now expects a drop of 3% to 5%, while profit margins are also expected to fall.
It is cutting jobs across its WPP Media arm as part of aims to slash costs by £150 million a year.
Shares in the firm slumped by as much as 16% in early trading on Wednesday, hitting the lowest level for 16 years.
Mark Read, outgoing chief executive of WPP, said: “Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business.
“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.
“As a result, we are updating our guidance for the full year and reducing our expectations.”
He added the group was “taking appropriate actions to respond to the current trading environment”.
After a difficult June, WPP now forecasts like-for-like net revenues to slump by 5.5% to 6% in the second-quarter and by 4.2% to 4.5% in the first half.
Underlying operating profit in the first half is predicted to fall to between £400 million and £425 million, down sharply from £646 million a year earlier.
The profit alert comes just a month after it announced that Mr Read was leaving following seven years in the role and three decades with the group.
He took over the top role in 2018 amid a period of upheaval following the resignation of Sir Martin Sorrell amid a workplace inquiry.
Mr Read has led the business through a turbulent period as it sought to grow despite pressure from social media giants and the rapid expansion of AI.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said WPP’s “start to the year was poor, and its first-half performance fell short of its original underwhelming guidance”.
“It’s clear that more needs to be done to turn WPP’s future around, and while the hunt for a new CEO continues, it’s unlikely that WPP will regain its crown as the world’s biggest advertising agency,” he said.
