WPP Posts Q1 Organic Revenue Growth Of 5.1%

WPP reported a 10.5% revenue gain in the first quarter to 3.076 billion British pounds (about $4.47 billion at today’s exchange rate).

The company said organic revenue growth was 5.1% with 3.9% growth from acquisitions and 1.5% from currency fluctuations.

By comparison the Interpublic Group last week reported organic revenue growth of 6.7%, Omnicom 3.8% and Publicis Groupe 2.9%.

Organic growth by region for WPP was led by North America (6.9%), followed by the UK (4.7%) and Western Continental Europe (4.4%). Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe had combined organic revenue growth of 3.4%.

WPP reported organic net sales growth of 3.2%. In its presentation to analysts it said that disclosure of both revenue and net sales figures are now necessary to “more accurately show underlying trends, given the significant increase in both on-line media buying as principal, together with pass-through costs for data investment management.”



The other holding companies don’t feel as strongly about the issue and don’t report organic net sales separately.

The group’s advertising and media management segment posted the strongest organic revenue growth, up nearly 8% for the quarter. Net sales organic growth for the segment was 3.4%, a reflection of the group’s growing business of buying and then reselling digital media directly to clients.

In the U.S. overall organic revenue growth was nearly 7% with almost 4% net sales growth.

Net new business in the period totaled nearly $1.8 billion with $925 million attributed to creative agency wins and $854 attributed to media agency wins.

Executives on an analyst call Thursday morning, including CEO Martin Sorrell, Rob Norman, Chief Digital Officer at GroupM and Adam Smith, head of forecasting, cited ecommerce as a significant growth opportunity for the company, particularly in the U.S. The country’s ecommerce activity has not grown as fast compared to other regions like China and UK because of the “legacy infrastructure of retail” said Norman.

The company continues to project growth of between 3% and 4% for full year 2016. And the firm expects to make acquisitions totaling between $300 million and $400 million. Sorrell said the company would continue to execute what he termed a “non-plonker” strategy by which he meant the firm wouldn’t overpay or plonk down vast sums in order to beef up the firm’s position in a sector, as he suggested Publicis Groupe did with Sapient.

He cited Globant—the IT tech and consulting firm—as an example. WPP made an $80 million pre-IPO investment in the firm three years ago. “It’s now worth three times that,” he said.

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