WPP (NYSE:WPP), a leading global advertising agency, was the largest detractor from performance for the fiscal year and most recent quarter. WPP’s fiscal first-half earnings fell short of market forecasts. The shortfall was driven by lower than projected like-for-like sales across segments. Profits before tax and earnings per share were also less than investors expected. Some of the factors that hurt WPP’s performance were account losses during the Mediapalooza event, exposure to developed market multinationals that have reduced advertising spending and digital revenues that are growing slower than those at Internet giants in the U.S. and China. Although management is expecting business to gradually improve in the second half of the year, the company lowered its full-year net sales organic growth guidance to a range of zero to +1% from the prior +2% growth prediction. However, this adjustment did not surprise us, as our growth estimates were closer to management’s revised outlook.
From David Herro (Trades, Portfolio)'s Oakmark International Fund 3rd quarter 2017 commentary.
