Advertising company WPP has cut its revenue and profit forecasts after citing a “challenging” economic backdrop.

In a trading update for the group’s H1 period, it said its like-for-like (LFL) revenue declined by between 4.2% and 4.5%, driven by a deterioration in performance in Q2.

WPP, which is headquartered in London and has over 100,000 employees, revealed that its H1 headline operating profit would be in the range of £400m to £425m.

The FTSE 100 company has now reduced its full-year revenue guidance from a decline of between 0-2% to between 3-5%. WPP said this was due to “continued macro uncertainty” weighing on client spend as well as “weaker net new business than originally anticipated”.

WPP CEO, Mark Read, said: “Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business. While we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated and we expect this pattern of trading in the first half to continue into the second half.

“Our focus remains on ensuring the right balance between investing in the business for the long-term and continuing to reduce structural costs, while taking appropriate actions to respond to the current trading environment.”

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, described WPP’s start to the year as “poor”, and suggested the company’s H1 performance had fallen short of its “original underwhelming guidance”.

Chiekrie added: “Net revenue is now set to fall by between 3% and 5% over the full year due to client losses and a tough macro environment, which has caused continuing clients to spend less.

“To make matters worse, the new business pipeline is drying up, with performance in June being worse than WPP expected. There’s not likely to be much let-up over the second half either, so the group’s going to need new ways to engage clients and protect margins.”

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