WPP Issues Profits Warning In Continuing Difficult Conditions
Global advertising and communications group, WPP, has issued a profits warning, saying that trading is difficult with ‘few, if any, signs of recovery in the advertising and marketing services industry.’ The news of WPP’s continued troubles will come as a disappointment to other advertising and marketing companies, as it is something of a bellwether to the industry.
By region, the US markets remained weak, down by 6% in the first five months of the year; UK revenues were flat, whilst continental Europe rose by 5%. In the Asia Pacific, Latin America and the Middle East they grew by 3%. Worldwide revenues were down over 2% on a reportable basis.
By sector, advertising and media investment management at WPP was flat; information and consultancy up over 6%; public relations and public affairs down over 11% and branding and identity, healthcare and specialist communications down over 3%.
Forecasts WPP forecasts that the advertising recovery will be shallow and gradual, rather than U- or V- or W-shaped. This concurs with the predictions of analysts at Merrill Lynch (see Forecasts).
The recovery will be led by the US; 2002 is expected to be stronger than 2001 and 2003 better than this year. A pronounced recovery, however, will have to wait until after the US presidential election and the Athens Olympic Games in 2004, says WPP.
Towards the end of trading yesterday WPP shares slipped to close down 38½p, but had made up 20p to stand at 573½p by late morning today.
