WPP warns of ‘Brexit anxiety’ as rate of UK sales growth slows

WPP chief executive Sir Martin Sorrel.
Photo: Anthony Devlin/PA Wire

WPP chief executive Sir Martin Sorrel. Photo: Anthony Devlin/PA Wire - Credit: PA

Advertising giant WPP said yesterday that the first signs of “Brexit anxiety” were beginning to show as it reported slower sales growth in Britain.

The firm, run by Sir Martin Sorrell, said in its third-quarter trading update that like-for-like growth in the UK came in at 2.1%, compared with 3.5% in the previous quarter.

WPP said: “All parts of the group’s businesses, except data investment management and public relations and public affairs, softened. Perhaps, the first signs of Brexit anxiety.”

However, it also flagged the impact of a weak pound, which boosted overall revenue by 23.4% during the quarter to £3.6bn, with North America and continental Europe driving growth. On a constant currency basis, the firm said overall sales grew 7.6%.

WPPS said reported revenue for the first nine months of the year was 15.8% higher at £10.147bn while revenue in constant currency terms was up 8.5% for the year to date.

“In the first nine months, operating profits were well ahead of last year and net sales operating margins on a constant currency basis were up 0.3 margin points, in line with the group’s full year margin target of 0.3 margin points improvement and in line with the first half,” it added.

Speaking to BBC Radio 4, Sir Martin said: “I always think of a country’s currency as its stock price, so when the currency falls it is rather like the country’s stock price falling.”

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Sir Martin, a prominent proponent of remaining in the EU, again reiterated that WPP will place a greater emphasis on growth in western continental Europe, in particular Germany, France, Italy and Spain.

To this end, WPP announced in September that it is investing in French media firm Les Nouvelles Editions Independantes, which owns holdings in newspaper Le Monde and VICE France.

In its outlook, WPP highlighted the “diplomatic warfare and long-term negotiation around Brexit” and “right-wing and left-wing populism around ... the presidential election in the United States” as reasons for caution.

However, it expects improvements during the final quarter in Asia Pacific, Latin America and Africa & the Middle East, despite continuing concerns about the rate of growth in China.