WPP Plc, the largest advertising agency, said revenue from continuing businesses will grow 4 percent this year as the London Olympics and U.S. presidential elections buoy the industry.
Sales last year rose 7.4 percent to 10 billion pounds ($16 billion), the Dublin-based company said in a statement today. The average estimate of analysts in a Bloomberg survey was for revenue of 9.96 billion pounds.
WPP plans to spend 300 million pounds to 400 million pounds on acquisitions this year, Chief Executive Officer Martin Sorrell said in an interview today. The company is betting that expansion in faster-growing markets, such as Brazil and China, and new technology to facilitate digital ads will help the company weather a potential slowdown in 2013.
“One cloud on the horizon is what happens in 2013, post the election in the United States,” Sorrell said in an interview with Bloomberg Television. “We are seeing more muted growth in terms of GDP.”
WPP agreed to buy almost three dozen companies or units last year, and has announced another 10 deals so far in 2012 according to data compiled by Bloomberg. WPP spent 469.8 million pounds last year on acquisitions, more than twice the investment of 2010. The company has added 5,000 employees and will continue to add workers if the business grows, Sorrell said.
WPP shares climbed 3.4 percent to 830.5 pence at 8:48 a.m. in London trading.
Adjusted earnings per share, excluding a one-time effect from a tax provision, were 67.7 pence. Analysts in the Bloomberg survey had predicted 65.6 pence before extraordinary items.
The London Olympics and European soccer championships this summer, as well as the U.S. presidential elections should buoy the industry this year. Still, customers in Europe are struggling with a debt crisis that could hurt growth in 2013, Sorrell has said. Because of this, less expensive digital ads are becoming more popular, he said.
WPP will spend $2 billion on Google Inc. ads this year, up from $1.6 billion in 2011, Sorrell said. The Facebook Inc. and Twitter Inc. social networking services will also get a larger amount from the agency, he said.
In December, ZenithOptimedia, a Publicis Groupe SA-owned company that publishes research on advertising, lowered its forecast for the industry’s performance this year to 3.5 percent growth from an initial prediction of 4.1 percent.