Pre-tax profits at advertising and communications giant, WPP, tumbled by 50% to £205.4 million in the year ended 31 December 2002, indicating the severity of the worldwide recession and its impact on advertising and marketing services.
The group this morning said that conditions are to remain tough throughout the remainder of this year. Budgets are anticipating that revenues will be broadly flat in comparison to 2002, with advertising and media investment management revenues up by 1%, counterbalanced by flat marketing services revenues. The second half of the year is predicted to be stronger than the first.
Worldwide economic conditions are made particularly uncertain by the prospect of a war in Iraq. The Board of WPP says that a ‘bath-shaped’ or ‘saucer-shaped’ recovery, where the upturn is gradual, still seems the most likely. “The economy still seems to be paying the price for the over-expansion of the late nineties,” it said.
Advertising and media
The advertising and media investment management sector of WPP’s business saw its revenues rise by 2.5% year on year in 2002.
Included in this group are Ogilvy & Mather Worldwide, J Walter Thompson, Y&R Advertising, Red Cell, MindShare and Mediaedge:cia. These businesses contribute 46.5% of total group revenues and 57.4% of total group operating profit.
Regional growth
The UK and North America were the weakest regions in terms of year on year revenue growth, down by 1.3% and 2.4% respectively. Continental Europe, meanwhile, saw revenues rise by 5.3%, whilst the combined Asia Pacific, Latin America, Africa & the Middle East regions rose by 4.7%.
This gives a total group revenue rise of 0.7% on a constant currency basis. Reportable revenue was down almost 3% to £3.9 billion.
Subscribers to MediaTel Insight MediaTel Insight MediaTel Insight can access more national and international media analysis, forecasts and news by visiting the site.
