(MENAFN- PRovoke) LONDON - WPP has issued a sharp profit warning after reporting a deeper-than-expected third-quarter decline, as client losses and cuts in advertising spend continued to weigh heavily on the world's largest marketing group.

The results prompted newly-appointed chief executive Cindy Rose to describe performance as“unacceptable”, vowing to simplify operations and strengthen execution as part of a strategic overhaul due early next year.

Group revenue for the quarter fell 8.4% year-on-year to £3.26 billion, with like-for-like (LFL) revenue less pass-through costs down 5.9%. This is worse than the 4.7% decline reported in Q2; WPP now expects full-year LFL revenue to fall between 5.5% and 6.0%, compared with previous guidance of a 3–5% decline, and an operating margin of around 13%, also at the low end of earlier expectations

The group said weakness was driven primarily by its Global Integrated Agencies and media operations, which were hit by client assignment losses and spending cuts, particularly in North America, the UK and Germany.

Within WPP's public relations division, revenue less pass-through costs declined 5.9% LFL in Q3, an improvement on the 7.8% decline in Q2. The company said its flagship PR agency Burson“saw a mildly improved trend relative to the first half but continued to face a challenging environment” amid weaker discretionary spending by clients.

However, management pointed to“encouraging new business momentum, particularly in the US”, with recent wins including Stellantis in Brazil, Lipton Teas & Infusions in the UK, and Tourism New Zealand in Australia.

The division's reported revenues were also affected by the 2024 disposal of FGS Global, which shaved roughly three percentage points off group-wide sales comparisons.

Geographically, North America declined 6.0% LFL, reflecting further deterioration in media and creative agencies such as Ogilvy and AKQA, which were hit by client losses and budget reductions. The UK fell 8.9%, as account losses compounded spending cuts across key sectors.

Western Continental Europe declined 4.4%, dragged down by Germany (-10.6%), though Spain returned to growth (+3.9%). The Rest of the World fell 5.0%, with India up 6.7% on strong new-business momentum, offsetting a 10.6% decline in China where macroeconomic headwinds persisted.

By sector, consumer packaged goods (-6.7%), automotive (-6.8%) and tech & digital services (-4.5%) were under pressure, while healthcare rebounded strongly with 6.7% growth, led by CMI Media Group and wins in pharma communications.

In her first major results call since taking the helm in September, Cindy Rose pledged a“disciplined and fast-moving transformation” of WPP's structure and strategy.

“Our recent performance is unacceptable and we are taking action to address this,” she said.“We have strong foundations - incredible clients, world-class talent, and market-leading technology partnerships. To deliver improvement, we will simplify and integrate our offer, harness our data and AI advantage, and build a high-performance culture.”

Rose outlined four guiding principles for the forthcoming strategic review, due early 2026: simplifying and integrating client offerings, powered by AI; improving execution and culture; expanding WPP's addressable market through enterprise and tech solutions; and strengthening financial discipline and capital allocation.

She highlighted AI and data capabilities as central to WPP's next growth phase, citing the launch of WPP Open Pro, an advanced edition of its AI-powered marketing platform, and a five-year expanded partnership with Google to develop cloud-based AI tools for clients.

Chief financial officer Joanne Wilson described Q3 as“weaker than expected,” adding that new-business gains in media and PR were not enough to offset major client losses such as Bayer.

WPP's results triggered an immediate market sell-off, with shares plunging more than 15% on Thursday, reaching their lowest point in over 25 years. The Financial Times noted that investors have grown impatient with WPP's lack of organic growth momentum, while The Guardian reported that internal sources described the company's performance as“a wake-up call for the entire advertising industry.”

Analysts expect WPP's strategic plan, due early next year, to determine whether Rose can stem client losses and stabilise the group's media and creative agencies. For the PR division, Burson's early progress will be closely watched as a potential bright spot within an otherwise difficult landscape.

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