WPP feels the pain as major clients tighten their belts

WPP is feeling the pinch as major clients slash ad spending. It has lost VW and AT&T and investors fear other giants such as Unilever are poised to cut back.

Its shares suffered in March when it warned of a slowdown and said rival agencies were indulging in “crazy behaviour” to win business.

On Thursday it reported a 17% rise in first-quarter profits to £3.6 billion, though it admitted that was largely down to sterling’s weakness.

WPP’s chief executive Sir Martin Sorrell, aka the Sage of Soho, said: “The new normal is tepid growth and low inflation. There is little pricing power for clients.”

He said the trend for “zero-based budgeting” meant that clients are “watching investment closely”.

He added that Theresa May will win the election and was right to call one. “I can understand why she wants more wiggle room. The Tories will do well, but not as well as polls indicate.” On Labour’s chances he said: “When you move to extremes you tend not to win.”

Sorrell was a strong opponent of Brexit and remains concerned. He said: “I have a grudging acceptance that we will come out. The best route would be a soft Brexit quickly. It looks like we will get a hard Brexit slowly. There are a tough couple of year ahead.”

Britain is one of WPP’s stronger markets — sales are up 3.7% and, in Europe, up 4.3%. But they are down 1.1% in North America. WPP shares had another wobble, off more than 2% at 1684p.