WPP shares fell c.-19% today, after the company issued its second profit warning this year. The company cites tougher macro conditions (c.50% of the cut) and lower net new business (the other c.50%). Other Ad Agencies are due to report over the next few weeks, but we suspect this warning is mostly driven by company-specific factors. We don''t see this warning as a ''kitchen sinking'' ahead of a new CEO''s arrival but rather a reflection of weak positioning relative to peers and soft underlying trends. Considering recent new business loss, CEO succession and potential disruption related to WPP Media reorganization, it is difficult to see a meaningful recovery before H2 26. We reduce our estimates by c.-11% and lower our TP to 460p (from 570p). Maintain Neutral. Much weaker Q2 25 / H1 25 momentum WPP announced that Q2 25 net revenue is expected to decline -5.5/-6.0% on an organic basis (c.-250/-300bp miss vs initial guidance) due to the challenging economic backdrop (c.150-200bp impact) and one-off effects (c.100bp impact). Trends to remain soft in H2, leading to c.-10% FY 25 adj. EBIT cut Taking into account lower organic sales (-3/-5%), FX impact (-2% expected) and lower adj. EBIT margin (-300/-350bp), the group is now targeting adj. EBIT between GBP1,340m and GBP1,500m, which comes in c.10% below previous estimates. At the mid-point, the FY guidance implies c.-3.7% organic sales decline in H2 vs c.-4.3% in H1 and adj. EBIT margin up +60bp in H2 vs -340bp in H1 25. Reality check, not ''kitchen sinking'' exercise Given a new CEO is expected to be announced soon, the company could be wanting to rebase estimates and acknowledge all the challenges at once. But we think the situation may remain challenging for some time and further rebasing of margins and cash return could be required when new CEO arrives.