WPP revenues up 7% in Q1 2011
WPP enjoyed a 7.0% increase in revenues in Q1 2011 to £2.223 billion. WPP revenues in constant currency were up 8.4%, reflecting the strength of the pound against the US dollar and Euro.
On a like-for-like basis, excluding the impact of acquisitions and currency fluctuations, the group posted a 6.7% rise in revenues and 7.4% gross margin compared with the same period last year.
“Revenues have continued to recover following the stabilisation in quarter one of last year and the sequential improvement in like-for-like growth in quarters two, three and four of 2010,” the advertising group said.
“The pattern of revenue growth in 2011 has started similarly to the second half of 2010, with improvements across all sectors and geographies. Our budgets for 2011 indicated like-for-like growth of 5% over last year and for the first three months we were in line with those projections. A first look at our flash quarter one revised forecasts, indicates further improvement for the year to over 6%, with a more balanced pattern over the two halves, despite tougher comparatives in the second half.
“In 2010 we were surprised at the speed of the recovery in the more mature markets of the United States and Germany and more traditional media, like free-to-air television. This pattern has continued into the first quarter of 2011, although as indicated in the budgets for this year, the faster growing markets of Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe are growing even faster. They were last into the recession and last out.”
During 2009, WPP went through a period of reducing headcount to balance the fall in revenues but has since been re-hiring in line with growth. “In 2009, the point-to-point headcount fell by 12%, in 2010 it rose 4.5% and in 2011, by 31 March, it had risen another 1%. Overall, therefore, the number of people in the business has fallen by over 6%, whilst revenues are now back to pre-Lehman levels on a proforma basis, a significant increase in productivity.”
The group’s average net debt in the first quarter was £2.216 billion, compared to £2.790 billion in 2010, at 2011 exchange rates. This represents a decrease of £574 million. Net debt at 31 March 2011 was £2.598 billion, compared to £3.109 billion in 2010 (at 2011 exchange rates), a decrease of £511 million.
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