WPP upbeat for 2011

WPP’s 2010 results are announced this morning – strong full year results, up 5.3%, were boosted by an impressive uplift in the last quarter, led by a recovery in the United States market. The company paints a positive outlook for 2011, when it forecasts operating margins to rise 0.5 points to 13.7 percent.

Final quarter organic revenue growth was 8.5 percent and revenue is also said to be up over 8 percent in the first month of this year. WPP joins Omnicom and Publicis in beating market expectations for the final quarter and for the full year. Analysts had expected WPP to report Q4 growth of 7.3 percent and full-year growth of 4.9 percent.

Overall reported revenue was up 7.4 percent to 9.3 billion pounds for 2010.

“2010 was a year of significant recovery, as clients re-focused on top-line sales growth and expansion, particularly in fast-growth geographic markets, as well as continued cost containment in the slower-growth markets of the United States and Western Europe,” Sir Martin Sorrell said.

Bank of America Merrill Lynch analyst, Richard Menzies-Gow, comments that the outlook remains “upbeat”:

“The statement reads confidently and points to similar organic growth in 2011 at +5%. It also emphasizes the build up of a more variable cost base as headcount has recovered, providing increased flexibility for any future revenue volatility. We nudge up our organic growth assumption from +4.9% to +5.4% and target a margin of 13.8% in 2011.”

The company raised its target for revenue coming from “new markets and new media” to 35 percent – 40 percent. WPP said nearly one-third of its sales currently come from those segments.

Reported contributions and margins by geographical area for 2010 were as follows: