By Adria Calatayud

WPP shares fell sharply after the company posted a steeper-than-expected drop in its top-line figure for the fourth quarter and projected a flat result at best this year.

The London-based advertising group said Thursday that revenue less pass-through costs fell 2.3% on a like-for-like basis in the fourth quarter, hit by declines in North America and China due to account losses and economic pressures.

This compares with expectations of a 0.2% decline, according to consensus estimates compiled by Vuma. Like-for-like revenue less pass-through costs is a closely watched measure of the company's top-line performance that strips out expenses billed to clients, currency movements and the effects of acquisitions and business sales.

The results sent WPP shares tumbling 16% at the opening bell.

For 2025, the owner of agencies including GroupM, VML and Ogilvy expects like-for-like revenue less pass-through costs to range from a flat performance to a 2% decline. Analysts had forecast a 1.8% rise, according to the same consensus.

The biggest ad groups enter into 2025 with diverging outlooks, at a time the industry is being upended by the rise of generative artificial intelligence and the growing dominance of tech giants. WPP's U.S. rivals Omnicom Group and Interpublic Group in December agreed to join forces in a deal that will create the world's largest ad business.

France-based peer Publicis earlier this month guided for organic net revenue growth of 4% to 5% and Omnicom said it expected organic growth to be between 3.5% and 4.5%, but Interpublic forecast an organic decline of 1% to 2% due to a hit from media account losses.

Analysts attribute WPP's underperformance relative to some of its peers due to its greater exposure to the tech sector and China, which have been under pressure lately.

WPP said revenue from tech clients stabilized in the second half, with growth in North America in the final quarter. However, its Chinese business continued to weigh on the group's results, with like-for-like revenue less pass-through costs down in the quarter.

The company said it expects a challenging performance in China in the first half, with some improvement later in the year. For the group as a whole, results should improve in the second half, WPP said.

For 2024 as a whole, the company reported a net profit of 542 million pounds ($687 million) compared with 110 million pounds a year before on revenue that declined 0.7% to 14.74 billion pounds.

WPP's headline operating margin--its preferred profitability metric--stood at 15% last year, up from 14.8% a year before. It anticipates margin to be broadly flat in 2025.

The board kept its final dividend unchanged from a year earlier at 24.4 pence a share.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

February 27, 2025 03:28 ET (08:28 GMT)

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