WPP Q1 Results Disappoint Market And Brokers
Media communications group WPP has this morning posted first quarter organic revenue growth of 6% – including, for the first time, the Young & Rubicam network. This is lower than the 10% analysts at ABN Amro had expected and well below the 13.8% growth posted by rival network Omnicom yesterday (see Omnicom Shows Strong US Growth In Q1 Results).
WPP says that organic revenue growth in the first quarter reflects the deceleration which is taking place in the US economy in general. “The impact of this slowdown has primarily impacted the technology, media and telecommunications sectors of the economy, although there is some spill over into the ‘old’ economy. So far, by region, it has primarily affected North America, with less impact on the UK and Continental Europe and even less on Asia Pacific and Latin America,” the statement says.
WPP says it is on target to achieve to grow operating margins from 14.0% to 15.0% in 2001.
ABN says that the results are on the disappointing side. It adds that Q1 new business wins of $365 million are ‘light’ compared with Omnicom’s $1.3 billion.
“The difficulties in the advertising industry are clearly starting to have an impact on the advertising agencies. WPP’s situation is exacerbated by the Y&R acquisition, which has added to the company’s problems,” says the broker.
Shares dropped following the statement this morning, down by 13½p at 773½ by midday.
ABN Amro: Hold
