WPP Plc Chief Executive Officer Martin Sorrell said the largest advertising company may increase sales by 4 percent next year, bolstered by the Olympics and U.S. elections and growth in Brazil, China and Russia.
The number is preliminary and is based on an early version of the Dublin, Ireland-based company’s budget for next year, Sorrell said at a conference organized by Morgan Stanley. The CEO said he wanted the outlook, which isn’t formal guidance, to refute the idea that the ad market is headed for a decline in 2012.
Sorrell asked his top managers to present conservative plans for the business next year in a strategy session in New York in September as Europe’s debt markets were showing signs of strain. WPP is planning to focus on profitability next year, aiming for gross margins of slightly more than 4 percent, Sorrell said in an interview in Barcelona. He said that they’re on track to reach 5.7 percent this year.
“A couple of months ago had you said to me what will I expect from the 2012 budget, I would have estimated 2 to 3 percent” sales growth, Sorrell said. “I don’t think that 2012 is going to be as bad as some of the doom mongers would have you believe.”
Spending on acquisitions to 200 million pounds ($316 million) to 300 million pounds compared with the 400-million-pound budget this year, Sorrell said. The U.S. might see $3 billion to $4 billion in spending on the presidential elections in 2012, and there will also be a boost to advertising connected with the London Olympics, he said.
The average estimate of analysts surveyed by Bloomberg is for WPP’s sales to rise more than 6 percent to 9.93 billion pounds this year, and 4.4 percent to 10.4 billion euros next year.
Last month, the company predicted a slowdown in sales growth in the fourth quarter because of troubled economies in the U.S. and Europe. The U.S. deficit may hurt prospects in 2013, Sorrell said today.