By Sarah Young
LONDON (Reuters) -Consumer goods companies and carmakers are spending less on advertising as they assess the impact of tariffs, WPP warned on Thursday, as it halved its interim dividend, showing the scale of the challenge facing incoming CEO Cindy Rose.
The British company, whose agencies include Ogilvy, VML and WPP Media, named Microsoft executive Rose as its new boss last month, days after it downgraded forecasts, blaming the loss of big client Mars Inc and the phasing of business for a dire June.
For the second quarter, WPP reported a 5.8% drop in underlying net sales, but said it was on track to meet its downgraded 2025 guidance for a fall of 3% to 5%. It had previously forecast a range of flat to down 2%.
The company also announced an interim dividend of 7.5 pence per share, half the 15 pence per share it paid out last year, and said the new CEO would lead a review of strategy and future capital allocation policy.
WPP shares dropped 4.5% in early deals, hitting levels last seen in 2009. The stock has lost over 50% of its value in the year to date, underperforming Britain’s blue-chip index which is up 12%.
CEO Mark Read, who hands over to Rose on September 1, called the phasing of business wins during June “one-off factors”, but warned the general environment was tough.
“I think a lot of clients are distracted by the macro, tariffs, figuring out what to do,” he said in an interview, adding that in the first half of the year, WPP had seen fewer than half the number of pitches it would normally expect to see.
Companies are still unsure about the secondary effects of tariffs, he said, in terms of the impact on pricing and consumer spending.
WPP last year lost its crown as the world’s biggest ad group to France’s Publicis, and lost not just Mars but also Paramount as a customer in June. But Read said clients weren’t deserting WPP.
“Our industry is characterised by major pitches and some we win, like Amazon or Unilever, and others we’re not successful,” he said. “We have to look at business over a period of time.”
He said he was confident that the company’s main media buying agency WPP Media, previously GroupM, would start showing improvements later this year as a turnaround plan under new leadership gains traction, building on more use of data and AI.
($1 = 0.7481 pounds)
(Reporting by Sarah Young. Editing by Catarina Demony and Mark Potter)
