By Paul Sandle
LONDON (Reuters) -WPP, the world’s biggest advertising group, downgraded its full-year growth forecast on Friday as its chief executive said a decline in marketing by major US tech companies had taken the company by surprise and left the outlook unclear.
Shares in the British group fell more than 7% in early deals after it reduced its forecast for growth in full-year like-for-like revenue less pass-through costs to 1.5-3.0% from 3-5%.
Chief Executive Mark Read said lower spending by technology clients and delays in tech-related projects had caused the U.S market to fall in the second quarter, offsetting accelerating growth in other regions, including China.
“What happened in the second quarter took us a little bit by surprise, I’d say, as the quarter went on,” he said in an interview on Friday.
“(Tech clients’) spend will pick up after a period of time, but I think we are nervous for the rest of the year because we can’t get total clarity on when that’s going to happen.”
The tech sector in turn is wrestling with clients’ reduced willingness to spend.
Apple on Thursday forecast a sales slump would continue into the current quarter, sending its shares lower after it predicted what could be the fourth quarter of declining sales.
WPP rival Interpublic also lowered its annual growth forecast last month after it posted a fall in quarterly revenue similarly blamed on tech clients cutting marketing budgets.
WPP’s Read said consumer goods companies continued to spend, and categories such as leisure and financial services were strong.
The group reported a 2.0% rise in like-for-like revenue less pass-through costs to 5.81 billion pounds ($7.39 billion) in the first half.
($1 = 0.7865 pounds)
(Reporting by Paul Sandle; editing by William James and Barbara Lewis)
