WPP Revenue Beat Forecast on Digital, Fast-Growing MarketsKristen Schweizer
WPP Plc, the world’s largest advertising company, said first-quarter revenue rose 5.9 percent, lifted by digital operations and business in fast-growing markets and surpassing company expectations.
Sales for the period were 2.53 billion pounds ($3.91 billion), the London-based company said today. That beat the 2.52 billion-pound average estimate of four analysts surveyed by Bloomberg. Like-for-like revenue, which strips out effects from currency fluctuations and acquisitions, gained 2.1 percent.
WPP, which owns the Young & Rubicam and Grey Group agencies, has been buying digital advertising assets and companies in fast-expanding markets such as China and Brazil in recent years to counter slower growth in Europe and North America. Chief Executive Officer Martin Sorrell called “2-3 percent revenue growth something to be proud of” and said the first-quarter 2.1 percent sales increase was “better than budgeted.”
WPP forecast revenue growth of about 3 percent and targets an operating margin improvement of 0.5 points for 2013.
“We started to look at revised forecasts and that indicated revenue was growing above 3 percent and, all in all, our margins are in line with an increased target of 50 basis points,” he said in a telephone interview today. In that case, “we’ll have another record year.”
The shares slipped 0.6 percent to 1,069 pence at 9:05 a.m. in London.
WPP plans to spend 300 million pounds to 400 million pounds on acquisitions this year, mostly on small and medium-sized companies, Sorrell said yesterday.
Net new business during the first quarter was $1.5 billion, compared with $1.86 billion in the first quarter last year. WPP’s Young & Rubicam was named the lead creative agency this week for department-store chain J.C. Penney Co. More high-profile accounts would be named in coming weeks, Sorrell said.
The U.S. is WPP’s largest market, followed by the U.K. and China, while Argentina, Brazil, South Africa and Thailand are among the fastest-growing countries, Sorrell said. A third of WPP’s revenue comes from high-growth markets, and digital activities account for 34 percent, he said.
The company expects additional boosts next year with the soccer World Cup in Brazil, Winter Olympics in Sochi, Russia, and U.S. congressional elections.