Oct. 24 (Bloomberg) -- WPP Plc, the biggest advertising company, reported third-quarter sales that outperformed French rival Publicis Groupe SA, sending the stock to a 13-year high.
Revenue excluding currency fluctuations and acquisitions grew 5 percent, the London-based company said today. Numis Securities had projected 3.4 percent growth. Publicis, which is merging with Omnicom Group Inc. to unseat WPP as market leader, last week reported sales growth that slowed to 3.5 percent.
WPP credited the U.K. and the Americas for its growth and reiterated its annual target of more than 3 percent. Chief Executive Officer Martin Sorrell is spending as much as 400 million pounds ($648 million) this year acquiring digital-ad assets and operations in countries such as Turkey, Brazil, Vietnam and India to counter slower growth in much of Europe.
“My sense is WPP is picking up a bit of margin and from the Publicis-Omnicom deal too and getting some good people from the deal,” said Alex DeGroote, a media analyst at Panmure Gordon & Co. in London. “Europe’s been a dog’s dinner for three, four years now but we can really see a recover underway in WPP numbers.”
WPP traded up 2.2 percent at 1,342 pence at 9:40 a.m. The previous intraday high was in March 2000. Should the stock close at high price, it would be the highest since at least January 1995, according to data compiled by Bloomberg.
The more than 3 percent growth target is “conservative” and WPP will probably beat Numis’s full-year growth forecast of 3.2 percent, analyst Paul Richards wrote in a note.
WPP has made 45 acquisitions or raised equity stakes in the first nine months, with the bulk in new media and emerging markets. Last week, it bought the agency IM2.0 for an undisclosed amount to bolster its network in China, its third-biggest market.
The company sees growth improving in Asia in the final quarter, while western Europe slows. All business sectors save public relations are expected to maintain their growth rates from the first nine months, according to the statement.
Net new business in the first nine months of the year totaled 4.9 billion pounds. The company said it still aims to grow faster than the industry average and expects annual profit growth, before interest and taxes, of 10 percent to 15 percent, bringing margin expansion of 0.5 percentage point or more.
Publicis’s tie-up with Omnicom is due to be completed early next year. Publicis reported a slowdown in the third quarter last week as ad spending weakened in China. The day before, its New York-based merger partner showed strength in North America, reporting 4.1 percent sales growth, excluding some items.
WPP revenue for the quarter rose 7.4 percent to 2.68 billion pounds, meeting analysts’ estimates compiled by Bloomberg. The company reiterated its target for revenue from fast-growing markets and digital operations to account for 40 percent to 45 percent of total sales in the next five years.
Omnicom and Paris-based Publicis announced an all-stock deal in July that would give the combined company a market value at the time of $35 billion. They held their first joint management meeting over a long weekend in Miami to start work on integration planning, according to an Oct. 21 statement issued on the final day. The merger is due to be completed in the first quarter of 2014, pending antitrust approvals.
The deal will bump WPP to number two in the advertising world. It’s held the top spot since the 2008 acquisition of Taylor Nelson Sofres Plc.
Prospects for 2014 look good with the World Cup in Brazil, Winter Olympics in Sochi and mid-term Congressional elections in the U.S., according to WPP. Sorrell said he expects ad industry growth between 3.5 percent to 4 percent next year.
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