WPP Takes Bullish Stance As Pre-Tax Profits Rise
WPP chief executive, Sir Martin Sorrell, has indicated that an end to the worst advertising downturn in memory is in sight as the company posts a solid 18% increase in pre-tax profit to more than £473 million for 2003.
The global advertising and marketing network, which owns J Walter Thompson, Ogilvy & Mather and Young & Rubicam, saw revenues rise by over 5% last year to £4.1 billion, with operating margin rising to 13% during the same period.
WPP said that advertising and media were the driving forces behind its positive performance with like-for-like revenue growth, excluding the impact of the acquisition of Cordiant, coming in at 1.5%. Public relations continued to be affected by the downturn, but the group claims that last year’s performance was not as bad as in previous years with revenue down by a nominal 0.6%.
The company predicts that 2004 will bring further signs of recovery with factors such as the US presidential election, the Athens Olympics and the European Football Championships helping to boost spending.
Sorrell is usually reluctant to be overly upbeat when predicting the industry’s fortunes and has so far refused to call an end to the slump, insisting that any recovery in the economic climate would be gradual, resembling a bath-shaped graph.
The media mogul appeared more bullish today following what was a remarkably upbeat set of results from WPP. He said: “We are definitely out of the bath – one potential worry being what a re-elected or newly elected President might have to do about a fiscally driven large government deficit, a weak US dollar and rising inflation after the first Tuesday in November.”
However, WPP said the outlook for 2005 was less certain, partly because of the economic worries in the United States, where there is a ‘fiscally driven’ large Government deficit, a weak US dollar and rising inflation.
The advertising and marketing group experienced its most significant revenue growth outside Europe and America, where revenues increased by 13%. In the UK revenues rose by 7.4% year on year, just ahead of the overall average for the group.
Recent indicators suggest the UK outlook is improving and the latest Bellwether report from the IPA reveals a rising tide of corporate optimism that could see adspend climb to levels not seen since the dotcom boom (see Bellwether Reveals Increasing Optimism For Advertisers).
WPP: 020 7408 2204 www.wpp.com
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