WPP's Read says reviewing strategy as results boost shares

By Kate Holton

LONDON (Reuters) - Mark Read, tasked with running WPP after the abrupt departure of founder Martin Sorrell, said he believed the world's biggest advertising group had the tools to navigate a rapidly changing industry as it reported better than expected quarterly results.

Digital boss Read, appointed joint chief operating officer alongside acquisitions specialist Andrew Scott, said he was not complacent about the challenges ahead and would work to restructure a group facing lower customer spending and technological upheaval.

Read was speaking as the group, the owner of agencies JWT and Ogilvy & Mather, reported better-than-expected first-quarter trading with organic net sales down 0.1 percent and not the 1 percent drop that analysts had forecast, sending its shares up 9 percent.

 

"We are not complacent about what we need to do and we recognise that we need to get the top-line growing more quickly," Read told Reuters in an interview.

"There are structural shifts in the industry and we need to have more of a structural response, (but) we are an industry in structural change, not structural decline."

WPP, which provides advertising, data and market research to the likes of Ford, Unilever and Vodafone through its 200,000 staff in 112 countries, has been rocked this month by the departure of its founder who launched the company 33 years ago.

HARD ACT TO FOLLOW

Sorrell, who built the company from a two-man outfit in 1985 to dominate the industry, will be a hard act to follow after he never missed a quarterly results session and used them as a platform to discuss everything from advertising trends to geopolitical events.

Investors, and the board, are likely to be watching how Read and Scott deal with the presentation to financial analysts later on Monday, compared with the smooth Sorrell.

WPP has trailed its peers Omnicom, Publicis and IPG in terms of growth rates in the last year as it was particularly hit by the lower spending from consumer goods groups such as Unilever and P&G.

It has said it does not expect to grow in 2018, a position it reiterated on Monday.

The weak performance, combined with the upheaval sparked by the growth of Google and Facebook, has prompted some analysts to question whether WPP should be broken up or at least sell some underperforming divisions such as its market research arm.

Read, who is seen as a front runner for the CEO job due to his previous nine years on the board, said it did not make sense to break up WPP but that he and Scott were reviewing all options and will present them to Executive Chairman Roberto Quarta.

He said there was no timetable for the process.

"Roberto has asked Andrew and I to look at the strategy and come back as quickly as we can to the board with recommendations," he said.

The improved trading is likely to ease some of the pressure on the group. Net sales slipped by 0.1 percent in the first quarter, compared with the 0.9 percent drop it produced in 2017.

The results were boosted by an improved performance in Britain and Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

"Mark Read and Andrew Scott are providing the stability and leadership WPP requires, but there is no standing still," Quarta said.

"They have my and the board's full backing to review the strategy, to come back to us with recommendations, and to move forward decisively to implement our vision for the group."

(Reporting by Kate Holton; Editing by Guy Faulconbridge/Keith Weir)