WPP raises forecasts after strong Q1

WPP provided a positive statement this morning, upgrading its 2011 forecasts to growth of over 6% rather than the 5% previously forecast. WPP said like-for-like revenue was up 6.7 percent in the first quarter – Omnicom reported first-quarter organic growth of 5.2 percent, and Publicis organic growth of 6.5 percent. It is the first time WPP has beaten both in the same quarter since 2006.

“The first quarter has been good and we’re feeling a bit more optimistic about the year,” Sir Martin Sorrell told Reuters in a telephone interview. “We’re doing ok, we’re seeing growth everywhere so it’s good stuff.”

WPP said the strong performance from more mature markets such as the United States and Germany and more traditional media such as free-to-air television had continued in the first quarter, while faster-growing markets such as Asia Pacific and Latin America had picked up. Emerging markets are put at +14.2%. There was also growth in the UK.

“Two of the group’s biggest markets in Asia, mainland China and India showed combined growth of 18.4 percent, versus 12.5 percent in 2010,” the statement said, adding that that rate could continue through the year.

The group also said it could beat its target of a 0.5 margin point improvement – WPP had set a target for operating margins to rise 0.5 margin points to 13.7 percent.

WPP said it was cautiously optimistic about 2011 and 2012, despite a host of economic concerns on the horizon.

Richard Menzies-Gow, analyst at Bank of America Merrill Lynch commented: “Our price objective for WPP is 940p. Potential risks to this price objective are: 1) Macro risks rising further and impacting global ad spend, 2) pricing pressure in media buying, 3) major new business losses, 4) failure for market research to recover in line with the rest of marketing services.”