WPP Plc, the world’s largest advertising company, raised its forecast for 2013 sales growth after stronger-than-expected expansion in the U.K. and North America helped counter a slowdown in Asia and Africa.
First-half revenue rose 7.1 percent to 5.33 billion pounds ($8.27 billion), compared with analysts’ average estimate of 5.29 billion pounds. Profit before interest and taxes rose 12 percent to 541.4 million pounds, the London-based company said in a statement today.
The owner of ad agencies Young & Rubicam and Ogilvy & Mather said revenue in July increased 5 percent on a like-for-like basis, the highest monthly growth rate this year. As WPP continues to see recovery, the industry is also coming to terms with the announced merger last month of Publicis Groupe SA and Omnicom Group Inc., which if approved will unseat WPP’s Chief Executive Officer Martin Sorrell from his No. 1 industry spot -- a deal Sorrell said today was “clunky” and counter to both companies’ strategies.
“There is a significant degree of concern with strategic and regulatory issues,” Sorrell said in a phone interview. “Potential client and, even more importantly, people conflicts are considerable, exacerbated by a lack of pre-announcement consultation.”
WPP’s shares rose as much as 4.2 percent to 1,227 pence and were 3.4 percent higher as of 8:55 a.m. in London trading. The company’s market value is 16.3 billion pounds.
As regulators in Asia, Europe and U.S. set about to examine the merger, which would create a company with a combined market value of $35 billion and $23 billion in 2012 revenue, Sorrell said WPP is raising its target for revenue from fast-growing markets and digital operations to 40 percent to 45 percent of total sales in the next five years from 35 percent to 40 percent.
After seven-month like-for-like revenue growth of 2.8 percent, WPP forecast sales growth of “over” 3 percent for the full year, compared with a previous forecast of “around” 3 percent. WPP also expects to meet an operating-margin expansion of 0.5 points or more for 2013 and is continuing to make strategically targeted small and medium-sized acquisitions, Sorrell said.
In the first half, revenue from U.K. operations was 669 million pounds, an increase of 13 percent, while North American sales rose 5.3 percent to 1.84 billion pounds.
“There has been some slowing of revenue growth rates in the faster growing markets of Asia Pacific, Latin America, Africa and the Middle East and Central and eastern Europe,” WPP said. “This was more than compensated by a significant improvement in the revenue growth rates in the mature markets of North America and the United Kingdom in the second quarter.”