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The stock of WPP AUNZ Limited (ASX:WPP) nosedived 36.364% as the company unveiled the resignation of 12-years standing CEO Michael Connaghan.
The announcement came early this morning followed by market downgraded guidance update. In the market release, communication specialist WPP AUNZ told that company has company has accepted the resignation of Mr. Connaghan from the role of CEO and Executive Director of WPP AUNZ Limited, effective from the end of this year, 31 December 2018.
CEO Michael Connaghan has led the company for more than a decade, earlier as CEO of STW followed by role morphing into WPP AUNZâs CEO. He has been accredited for playing the key role in the merger of STW with holding WPP plc in 2016.Â
It has been informed that Mike will work closely with the executive steering committee, to be led by Executive Director John Steedman during the transition phase to a new CEO. Mikeâs availability to the Board will remain in place until 31 March 2019.
WPP Chairman Rob Mactier stated Mike Connaghan has led the company wheeling notable transformation through a period of trajectory growth and investments in new businesses. He is also accredited for building a strong workforce by setting the standards high and inspiring people to leverage the scale, global knowledge and collective know how of the company.
Further, the cessation of Mr. Connaghan employment from 31 December 2018 will not cast any changes in the benefits and incentive plan that he has been entitled to receive under the terms of his service agreement.
CEO exit was not the only challenge for the company as its trading underperformance in August and September has forced the company to downgrade its full year guidance for 2018.
In a separate release to ASX, WPP told that on completing the Q3 reforecast process, the company has decided to bring down its existing guidance of 3% growth in earnings per share to estimated decline of 12%-15% in EPS for the full year ended 31 December 2018. Net sale of the company is now expected to decline 1%-2% on the sales of $869.9 million reported in previous year ended 31 December 2017. The revised downgraded guidance is driven by companyâs underperformance in production businesses and creative agency segment due to challenging market environment, specifically in retail and consumer sectors.
The downgraded guidance disappointed investors to such extent that WPPâs stock plunged 36.364% or $0.280 to trade at $0.490 on 23 October 2018 (2:59 PM AEST). It is currently trading at a PE of 9.870 x with market capitalization of $656.16 million. Moreover, in the past one-year WPP stock has seen a performance change of -18.95%.
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