Sorrell: WPP will continue to invest in emerging markets
WPP’s chief executive, Sir Martin Sorrell, said he will continue to invest in emerging markets, such as India, China and Brazil next year.
Speaking at the Morgan Stanley annual technology, media and telecoms conference, Sorrell said WPP will be cutting costs elsewhere to invest in emerging countries where WPP is strong.
He said: “We will have to invest in those markets and take out head count in more mature markets. The key thing for us is to balance revenue and cost growth in terms of headcount.”
WPP’s plans to cut jobs in mature markets, such as the US and UK, comes just a month after Sorrell put a freeze on all hires until further notice.
Sorrell is also currently dealing with the possible collapse of parts of the US automotive industry as Washington considers a bailout for GM.
Ford does not seem to be directly threatened but it is a major client of WPP – the car industry makes up 10% of WPP’s business.
On Tuesday, WPP’s share price was up by 5.5% to 340.5p as the FTSE 100 bounced from lows in line with Wall Street (see WPP’s share price bounces).
However, the communications giant has seen its shares hit in recent weeks due to concerns about its exposure to emerging markets, doubts over the health of its biggest client Ford and following its acquisition of the market research company TNS (see WPP Takeover Of TNS Expected To Be Confirmed Today).
Last month, WPP was forced to admit that the financial crisis has hit its UK and US businesses after it reported low Q3 results (see WPP Reveals Low Q3 Results).
However, Sorrell said he is feeling more optimistic about 2010, partly due to the financial packages lined up by the governments to help with the current economic crisis.
Sorrell predicts that financial markets will start recovering by mid-2009 and in to 2010.
He said: “Whether it is the lame duck administration or the incoming administration, there is clearly going to be a further massive fiscal stimulus package for the US economy and there are at least another 20 countries involved in some form of restructuring or guaranteed measures on liquidity.”
Sorrell offered no forecast for the last quarter of this year, but did say that he found some predictions “excessively pessimistic”.
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