WPP shares drop with CEO resigning

Advertising giant WPP AUNZ has seen its share prices fall with the company’s CEO and executive director Michael Connaghan stepping down, eight weeks after Deane Hubball’s resignation as boss of Melbourne subsidiary Active Display Group.

The company’s shares were reported to be 58 cents after Connaghan’s resignation was announced to the market yesterday morning, a 26 per cent drop from 78 cents on Monday afternoon. The company’s shares only slipped further to 50 cents on close Tuesday afternoon, falling by 36 per cent from the previous day.

WPP also updated its market guidance, now anticipating sales will drop by 1-2 per cent for Full Year 2018, down $869.9m for the year before. Earnings per share (eps) are expected to decline by 12-15 per cent from 9.8 cents from the full year ending December 31 2017, a significant drop from its prior guidance of 3 per cent growth from the year before.

While the group has seen growth in its digital, PR and media businesses, it says it has been offset by the underperformance of its production businesses and creative agencies, with 60 per cent of its decline against 2017 being attributed to two of its companies.

Display and signage printer Active Display Group, is currently being restructured, which WPP says should be finished by the end of the year. As listed in a memo sent out to its employees, Active is enacting changes including having made a number of staff redundancies, consolidating four sites into three and decommissioning its screen print, screen-making and screen washing equipment.

Connaghan is quitting after 12 years of being with the company. His resignation will be in effect from December 31, with the Board saying it will conduct a global search to identify a successor.

[Related: Active Display CEO leaves]

Connaghan’s departure comes six months after Sir Martin Sorrell resigned as WPP’s global head.

The company’s executive director John Steedman to lead an executive steering committee during the transition phase to a new CEO. Connaghan will work with the committee and be available to the Board and committee through to March 31, 2019.

Connaghan says, “It has been a diverse experience and a privilege to serve the company; from my early days with John Singleton Advertising, through to my role as CEO of STW followed by WPP AUNZ with $850m in revenue and more than 5,000 fantastic employees. WPP AUNZ is an inspiring place to go to work everyday. I am proud of the company we have built and the talented employees and impressive calibre of clients that we have nurtured and supported. I am confident that the company will go from strength to strength.”

Rob Mactier, chairman, WPP AUNZ says, “Mike has led the company through a period of extensive change and inspired our people to leverage our scale, global knowledge and collective know-how. It is a testament to Mike’s qualities that he recognises that it is now the right time for renewal as we seek to capitalise on the opportunities that the merger and our leadership position in the market presents, particularly as the industry undergoes further transformation.

“We thank Mike for the extraordinary commitment and contribution he has made to our company over some 25 years, most notably as CEO of the business since 2006.”

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