* Q1 net sales like for like up 0.8 pct v 1 pct forecast
* Says winning more contracts, momentum returning
* Shares down 2.5 percent on weak U.S. performance
(Adds shares, reaction, quotes)
By Kate Holton
LONDON, April 27 WPP, the world's
largest advertising group, reported first-quarter net sales
growth just below expectations as a weak performance in North
America added to downward pressure on the stock.
The British company, led by founder and CEO Martin Sorrell,
rattled investors in March when it cut its 2017 sales forecast,
citing an ultra competitive environment in which rivals were
having to scrap for every dollar of advertising spending.
From 3.1 percent net sales growth in 2016, WPP cut its 2017
target to a "conservative" 2 percent to reflect "tepid" economic
growth and weaker net new business trends.
On Thursday it reported a 0.8 percent rise in first-quarter
like-for-like net sales growth, slightly shy of expectations at
1 percent, after 2016 contract losses took their toll.
However it said it had seen an improvement in the amount of
new business it was winning, enabling it to reiterate its
It won $2.1 billion of net new work in the first three
months of the year, compared with $1.8 billion in the same
quarter last year.
"We had challenges on the new business front last year but
it's picked up now," Sorrell told Reuters. "But it's a tough
Net sales on an organic basis were down 1.1 percent in North
America while western continental Europe was up 4.3 percent and
Britain up 3.7 percent.
Its shares were down 2.5 percent in early trading, adding to
a 10 percent fall since it cut its outlook in March.
Having outperformed rivals for several years, WPP lost
contracts from the likes of VW and AT&T in
2016 and could suffer this year after consumer goods giant
Unilever, its third-biggest customer, said it planned
to cut advertising spending.
Like all advertising groups, the owner of agencies including
JWT and Ogilvy & Mather is being squeezed by clients who are
struggling to raise prices, forcing them to cut costs.
Unilever, which is looking to raise growth after recently
fighting off a takeover bid, has said it intends to cut the
number of advertisements it makes by a third and the number of
agencies it works with by half.
Analysts at Citi said the numbers were a little weak, but
unlikely to affect forecasts.
"If the company can convincingly argue that the Q1 should be
the nadir in terms of growth ... it may even be seen as a
turning point given valuation is clearly depressed," they said.
"Our own view is that growth will recover and, with it, so
will the multiple. We rate WPP as a Buy."
(Reporting by Kate Holton; editing by David Goodman and Jason