Friday 20 April 2018

FTSE 100 Index falls as investors turn on WPP over gloomy forecasts

The FTSE 100 Index closed down 56.27 points at 7,175.64.

Chief executive officer of WPP Sir Martin Sorrell (Jonathan Brady/PA)
Chief executive officer of WPP Sir Martin Sorrell (Jonathan Brady/PA)

By Ben Woods, Press Association Chief City Correspondent

Advertising goliath WPP was sent crashing into the red on Thursday after investors were left unimpressed by tumbling sales and its bleak outlook for the coming year.

Shares dropped 8%, down 114p to 1,280p, with the group posting its first fall in net sales since 2009 – down 0.9% for 2017 – and forecasting revenues to remain under pressure in 2018 after a “slow start” to the year.

WPP boss Sir Martin Sorrell said 2017 was “not a pretty year”.

Its stock market woes helped pull London’s premier index deep into the red, with the FTSE 100 closing down 56.27 points at 7,175.64.

Focusing on European markets, Germany’s Dax sank 1.8% and the Cac 40 in France suffered a 1.1% fall.

On the currency markets, the pound was in the doldrums as Brexit uncertainty and lacklustre manufacturing data did little to inspire traders.

Sterling was marginally lower against the US dollar at 1.37 dollars, with activity in Britain’s manufacturing sector drifting to an eight-month low.

The closely watched Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 55.2 last month, down from January’s 55.3, but above economist expectations of 55.0.

A reading above 50 indicates growth.

Despite new orders picking up pace, companies saw production growth eke out its slowest expansion for nearly a year.

The sluggish performance marks a stark contrast to the final months of 2017 when manufacturers ended the year on a strong footing, with output climbing to a four-year high in November.

Versus the euro, the pound was 0.2% lower at 1.12 euro.

Brent crude endured another hefty drop on the oil markets, slipping 1.2% to 63.97 dollars a barrel, as concerns over the supply glut dragged on the price.

It follows a report from the Energy Information Administration on Wednesday showing a hike in stockpiles of oil and gasoline.

Elsewhere in UK stocks, fashion house Burberry rallied as investors cheered the appointment of Givenchy designer Riccardo Tisci as the replacement for long-standing creative director Christopher Bailey.

Shares were up 58.5p to 1,592p on the news that Mr Tisci will join as chief creative officer from March 12.

It comes as new Burberry chief executive Marco Gobbetti, who took over from Mr Bailey last year, oversees a strategic overhaul at the group.

Mr Tisci, who spent more than a decade at Givenchy as creative director, will direct all Burberry collections and present his first for the brand in September.

On the second tier, Carpetright dived into the red after the embattled retailer rolled out its second profit warning since Christmas.

The group’s shares closed down by a fifth, off 17.8p at 60p, after it said it would swing to a full-year loss and had started talks with its lenders to ensure it does not breach the terms of its bank loans.

It said trading has remained under pressure, with like-for-like sales still falling despite a small improvement since January.

Carpetright is now looking at options to speed up a trading turnaround, although it said plans were at an “early stage”.

The biggest risers on the FTSE 100 Index were Evraz up 21.1p to 448.2p, Burberry up 58.5p to 1,592p, Shire up 113p to 3,222p, Admiral Group up 38.5p to 1,881.5p.

The biggest fallers were Rentokil down 26.5p to 263.1p, WPP down 114p to 1,280p, easyJet down 67p to 1,612p, Ashtead Group down 80p to 2,034p.

Press Association

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