WPP Sees Muted Revenue Growth In Third Quarter

In its quarterly trading update, WPP said that whilst the rate of decline was lower in the third quarter than in the first half of the year, falling consumer confidence is beginning to curtail the strength of any major recovery. This confidence has been hit during the summer by falling share prices on both sides of the Atlantic and increasing unemployment and could result in a ‘double-dip’ recession, as has previous been intimated by WPP chief Martin Sorrell (see Forecasts).

WPP says that the recesssion has continued to have most materially affected North America, with proportionately less impact on the UK, Continental Europe and Asia Pacific, Latin America, Africa and the Middle East. By communications services sector, it has impacted public relations and public affairs the most, branding and identity, healthcare and specialist communications next, advertising and media investment management less so and information and consultancy the least.

Third quarter revised forecasts indicate that WPP’s operating margin for the second half of the year is likely to be less than that of the first half.