UPDATE: WPP Predicts Ad Market To Remain Strong Through 2012
04 März 2011 - 10:16AM
Dow Jones News
WPP PLC (WPP.LN) Friday said it expects organic revenue growth
of around 5% in 2011 and that prospects for 2012 are encouraging,
after the rebound in global advertising accelerated in the final
quarter of last year led by the U.S. and emerging markets.
"The strong finish to 2010 has continued into 2011, with
like-for-like revenues in January 2011 up over 8%," WPP said in a
statement, echoing recent upbeat comments from rivals.
WPP, whose clients include Unilever N.V.(UN), Johnson &
Johnson (JNJ) and Ford Motor Co. (F), said Friday that organic
revenue growth in the fourth quarter was 8.5%, surpassing the
record 7.5% in the previous quarter, driven by the strong U.S.
market combined with rapid growth in Asia and Latin America but
also strong growth in the U.K. Organic revenue strips out
acquisitions, disposals and currency effects.
WPP's earnings follow a string of recent strong results from
rival advertising companies. U.S.-based Interpublic Group of Cos.'
(IPG) last week forecast organic revenue growth of 4% to 5% for
2011 with the resurgence in global ad markets showing no sign of
slowing. U.S. rival Omnicom Group Inc. (OMC) also topped street
views, particularly on resurgent domestic ad revenue while France's
Publicis Groupe SA (PUB.FR) last month posted organic revenue
growth of 12.5%, almost twice what analysts had expected for the
quarter.
Still, at 0844 GMT, WPP shares were trading down 2.2% at 818
pence, paring the biggest losses on a slightly higher FTSE 100, as
analysts seemed slightly disappointed that WPP didn't beat
consensus expectations by as much as some of its rivals. Despite "a
solid set of numbers that confirm the recovery, the lack of a clear
beat to expectations and recent share price strength in a 'nervous'
market means that the share price reaction should be muted," Exane
BNP Paribas analysts Charles Bedouelle said. Analysts also said the
2011 outlook is unlikely to trigger any upgrades.
Chief Executive Martin Sorrell told Dow Jones Newswires last
month that preliminary budgets were indicating organic revenue
growth of around 5% for 2011, up from previous indications of 3% to
4% growth as advertising markets continued to be strong at the
start of the year, notably in the U.S.
WPP said revenue in the U.S. rose 9.8% at constant currencies in
the fourth quarter, following 9.9% growth in the third quarter,
while the U.K. posted its strongest growth rate of the year in the
last quarter with organic revenue up 9.7%. Western continental
Europe remained difficult however as France, Greece, Spain, Ireland
and Belgium are still under pressure, WPP said.
The company sounded a positive tone with regard to 2012 as
events such as the U.S. presidential election, the London Olympics
and the UEFA European soccer championship should add 1% to 2%
growth to the global ad market.
The Dublin-based owner of advertising agencies including Ogilvy
& Mather, Young & Rubicam and JWT, said it will lift the
dividend pay-out ratio to around 40% from 30% over the medium term
after paying a record dividend for 2010. The company raised its
interim dividend by 15% to 11.82 pence a share, bringing the total
dividend for the year to 17.79 pence a share.
Full-year total revenue beat expectations, rising to GBP9.33
billion from GBP8.68 billion a year earlier. Net profit rose 34% to
GBP586 million from GBP437.7 million while profit before taxes and
excluding items--analysts' preferred measure of operating
performance--rose 21% to GBP1.23 billion, also beating market
expectations for GBP1.21 billion.
The group expects its operating profit margin to increase 0.5
margin points to 13.7% in 2011 after it posted an improved margin
of 13.2% in 2010.
-By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 54;
ruth.bender@dowjones.com
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