WPP is the world’s largest advertising group (owner of Ogilvy & Mather, Young & Rubicam and JWT, public relations companies Hill & Knowlton and Burson-Marsteller, plus a range of research and consulting firms. Major clients include Johnson & Johnson (JNJ) and Novartis AG (NVS).
Its latest set of results -http://www.stockopedia.com/news/announcement/WPP/090306wpp4313o.htm - were impressive beating analyst's forecasts but 2008 was said to be one of "two contrasting halves," with 5.0% organic revenue growth in the first six months being followed by a tougher second half as the impact of the global financial crisis took hold. Although the European football championships, the Beijing Olympics and the US Presidential Election had had their usual positive effect, worldwide advertising and marketing spending rose only between 2 per cent and 3 per cent during 2008. Other 2008 Highlights:
- Billings up over 16% to £36.9 billion & revenue up almost 21% to £7.5 billion.
- Constant currency revenue up 9% & like-for-like revenue up almost 3%. Emerging markets had the strongest performance, with revenues rising 16.9%, compared to just 4.6% growth in North America.
- Headline EBITDA up over 20% to £1.3 billion & headline operating profit before interest and tax up over 20% to £1.1 billion
- Second interim dividend up 12.6% to 10.28p per share
Looking forward, 2009 is expected to be difficult, particularly in the first half. Advertising spending expected to shrink by 4pc this year versus growth of 2pc in 2008. CEO Sorrell said WPP has a three-pronged strategy for weathering the recession: growing in the emerging markets, driving revenue using new media and building its consumer insight division. Plans to reduce its overall headcount of 112,262 by about 2%.
Recovery hopefully expected in 2010 - “Although the economic gloom has heightened recently, with further earnings disappointments, surprise dividend cuts, continued financial restructurings and rights issues, we still believe there will be a recovery of sorts in 2010, partly driven by weak comparatives, as the massive Keynesian fiscal injections, quantitative easings and interest rate reductions take hold".
