WPP AUNZ says weak media expenditure in the market generally, and the flow through of of contract losses of last year are weighing on revenue prospects for 2019.
The company says it has done better than its own internal forecasts in the first quarter of 2019 but the full year is looking weak.
WPP AUNZ in February posted a statutory loss of $17.1 million for 2018 on top of impairments and a hit to revenue from its Advertising, Media Investment Management segment. The statutory loss was a 123% fall from the $73.3 million profit result in 2017.
Numbers presented to the company's AGM in Sydney this week show a flat outlook for full year underlying earnings per share compared to the previous 12 months.
John "Steady" Steadman, interim CEO, told shareholders Q1 trading results were ahead of internal forecasts but behind last year.
Overall market media spend in the first quarter is expected to be down by about 7%.
First half trading results were expected to be weaker than the same six months last year but earnings would improve in the second half driven by turnaround of underperforming units and full year benefit of contract wins.
"The first quarter actual trading results are ahead of our internal forecasts, but behind the year prior, primarily as a result of the weak media expenditure and flow through impact of weak media expenditure and the flow through impact of contract losses of last year," Steedman told shareholders.
"The first quarter is always by far our smallest quarter for the year. We expect our half year results to be weaker than the previous corresponding period at both the net sales and underlying earnings per share lines as the drivers of our first quarter performance continues to play out.
"As budgeted, we are expecting a heavier weighting of earnings in the second half. This improved performance in the second half is driven by a number of factors including the commencement of a turnaround of the underperforming units identified in our October 2018 earnings guidance and the full year benefit of material contract wins late last year and in the first quarter of this year."
WPP AUNZ is implementing a turnaround and restructuring strategy including financial investment and management changes to position the overall business for growth.
Steedman says: "We know we can do better."
He wants to create a culture of excellence, as this slide from the AGM presentation shows:
"We know that our transformation requires that we collectively and individually transform, and this can only be done from the inside out which is why we made a strong commitment to culture, leadership and talent," he says.
"Our operating companies are all committed to a renewed emphasis on creating a culture of excellence. Good isn’t good enough. Excellence is what we seek, and our training Academy has reworked its entire curriculum to help our people deliver their very best work on a daily basis."
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