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Brexit uncertainty dragging back revenues at WPP, warns Sir Martin Sorrell Brexit uncertainty dragging back revenues at WPP, warns Sir Martin Sorrell
(35 minutes later)
Sir Martin Sorrell has warned that slowing revenue growth at his advertising company WPP appears to be early signs of business nerves over Brexit.Sir Martin Sorrell has warned that slowing revenue growth at his advertising company WPP appears to be early signs of business nerves over Brexit.
WPP, the world’s biggest ad company, said UK revenue at established businesses rose 2.1% in the third quarter – a slowdown across most of its divisions from 3.5% growth in the previous three months.WPP, the world’s biggest ad company, said UK revenue at established businesses rose 2.1% in the third quarter – a slowdown across most of its divisions from 3.5% growth in the previous three months.
Sorrell, WPP’s chief executive, told the BBC: “In the third quarter we softened a bit in the UK … What it tells you is that uncertainty in the UK over Brexit and some of the other things that are going on round the world makes our clients a little bit nervous and hesitant to invest.Sorrell, WPP’s chief executive, told the BBC: “In the third quarter we softened a bit in the UK … What it tells you is that uncertainty in the UK over Brexit and some of the other things that are going on round the world makes our clients a little bit nervous and hesitant to invest.
“That level of uncertainty makes our clients less willing to invest in capital investment, building plants and making investments and, in our own parochial case, investing in innovation for consumers and brand. Uncertainty is the enemy of growth.”“That level of uncertainty makes our clients less willing to invest in capital investment, building plants and making investments and, in our own parochial case, investing in innovation for consumers and brand. Uncertainty is the enemy of growth.”
Sorrell campaigned to stay in the EU and warned Britain was in danger of sleepwalking into a black hole that would damage economic growth. After slowing down before the referendum, WPP’s UK business picked up straight after the vote to leave but Sorrell said the economy faces tough times as Brexit takes hold. Sorrell campaigned to stay in the EU and warned that Britain was in danger of sleepwalking into a black hole that would damage economic growth. After slowing down before the referendum, WPP’s UK business picked up straight after the vote to leave but Sorrell said the economy faces tough times as Brexit takes hold.
He said there would be further spats between retailers and suppliers over price rises such as last month’s face-off involving Tesco and Unilever, and that consumers would feel the pinch as the weak pound raises the price of imports.He said there would be further spats between retailers and suppliers over price rises such as last month’s face-off involving Tesco and Unilever, and that consumers would feel the pinch as the weak pound raises the price of imports.
“If I look at our numbers, the uncertainty doesn’t help. If I look at the longer term, I look at the currency being the equivalent of the country’s stock price and it doesn’t help either.”“If I look at our numbers, the uncertainty doesn’t help. If I look at the longer term, I look at the currency being the equivalent of the country’s stock price and it doesn’t help either.”
WPP benefited from the pound’s post-referendum plunge because it earns more than 80% of its revenue outside the UK. Reported revenue surged 23.4% to £3.6bn in the third quarter – excluding currency fluctuations, it rose 7.6%.WPP benefited from the pound’s post-referendum plunge because it earns more than 80% of its revenue outside the UK. Reported revenue surged 23.4% to £3.6bn in the third quarter – excluding currency fluctuations, it rose 7.6%.
The UK economy has continued to grow quicker than expected in the three months since the Brexit vote on 23 June but economists have warned about tougher times ahead when the government triggers withdrawal from the EU before April 2017. Consumers, who have kept spending since the vote, are growing gloomier as price rises threaten to squeeze incomes.The UK economy has continued to grow quicker than expected in the three months since the Brexit vote on 23 June but economists have warned about tougher times ahead when the government triggers withdrawal from the EU before April 2017. Consumers, who have kept spending since the vote, are growing gloomier as price rises threaten to squeeze incomes.
“We are really in the foothills of Brexit. We really don’t know what the government policy will be in relation to negotiations with the EU. There are a lot of things the government has to sort out to reduce the uncertainty.”“We are really in the foothills of Brexit. We really don’t know what the government policy will be in relation to negotiations with the EU. There are a lot of things the government has to sort out to reduce the uncertainty.”
Sorrell said WPP was pressing ahead with investments in fast-growing markets and expanding in Germany, France, Italy and Spain in preparation for Brexit. WPP says it needs to expand in Europe to better serve clients as business moves there from London.Sorrell said WPP was pressing ahead with investments in fast-growing markets and expanding in Germany, France, Italy and Spain in preparation for Brexit. WPP says it needs to expand in Europe to better serve clients as business moves there from London.
WPP shares rose 3.5% to £17.70.WPP shares rose 3.5% to £17.70.