WPP Revs Up 5.5%, New Biz Nearly $2 Bil
London-based ad holding company WPP reported a 5.5% hike in revenues for the first quarter to $3.76 billion. The company said profits increased in the quarter versus the same year-ago period, but it did not provide a figure or percentage gain. It said operating profit margins were also “ahead of last year and in line with the Group’s targeted margin improvement” goal of half a percentage point.
Organic revenue growth, which excludes acquisitions and currency fluctuations, reached 4%, in the middle of the pack compared to competitors. Omnicom Group, for example, said its first-quarter organic growth rose 5.1%, Publicis Groupe and Havas reported comparable growth of 4.1% and 3.5%, respectively. Aegis is also at the high of the organic growth spectrum for the quarter, reporting an 8.1% gain, while Interpublic is at the lower end with 2.8% (after a 9.3% spurt for comparable year-ago period).
For the full year, WPP said that “early indications are” that organic growth will exceed the 4% reported in Q1 and be “slightly stronger” in the second half of the year. The company said it was also targeting a 10% to 15% profit gain (pre-tax and interest).
WPP said that Q1 growth patterns were similar to those that occurred in 2011. The stronger sectors included advertising, media, branding, health care and specialist communications, including direct and digital. Advertising and media management revenues topped the list with 8.4% revenue growth overall and 6.2% organic growth. Within that group, media revenues shot up 15% with organic growth nearly as high at 13%.
The company gave a shout out to agency networks Ogilvy & Mather and Grey for strong starts to the year, particularly in the U.S. and Latin America.
By region, Asia-Pacific, Latin America, Africa, the Middle East and Central and Eastern Europe showed continuing strength, with slower growth in the U.S. and Western Europe.
Net new business totaled nearly $1.9 billion for the quarter, an increase of about $500 million from the first quarter of 2011. Wins included a $700 million-plus assignment from L’Oreal for Germany and a $100 million global Levy’s assignment. In the loss column: Sprint and GlaxoSmithKline both shifted accounts to competitors.
Media operations under the GroupM umbrella accounted for slightly more than $1 billion of the total, while Ogilvy, JWT, Y&R, Grey and United contributed a combined $455 million.
WPP said its year has “started well,” but noted worries about the Eurozone, Mideast strife and China, where there are conflicting views about the country’s ability to sustain growth and at what levels. That said, the company reported that ad marketing expenditures “continued to rise as Western multinational companies and increasingly new-market based companies are prepared to invest in both capacity and behind brands in fast growth markets.”