Strong Pound Dulls WPP's Q1 Results

23 April 2007

LONDON: WPP Group on Friday reported a marginal decline in first quarter revenues, dipping 0.7% to £1.37 billion ($2.75bn; €2.02bn). It cited as as the primary reason for the near-standstill the fragility of the US dollar, down 11% against the British pound.

However, in constant currencies, Q1 revenues were up 6.3%. On a like-for-like basis, excluding acquisitions and currency, revenues were up 4.3%. On the same basis, gross margin was up 4.6%.

The results sustain the mid-single digit organic growth rate of the last two and a half years, which began in the second-half of 2004 and continued through 2005 and 2006. It also reflects the continued strong economic environment across the world.

In regional terms ...

  • Some softness in the United States in the last few months, relative to the strong last half of 2006, has been largely counter-balanced by improvements in Western Europe.

  • On a constant currency basis, Asia Pacific, Latin America, Africa and the Middle East, continue to be the fastest growing region, with revenues up almost 12%.

  • North America remains strong with revenues up over 6%. Continental Europe was up over 4% with western continental Europe continuing the improvement seen in the second half of 2006.

  • Although the United Kingdom remained the slowest growing region, revenues were up over 2% and gross margin up over 3%, reflecting the significance of market research revenues in the United Kingdom.
According to group ceo Sir Martin Sorrell, WPP expects the good times to roll through 2008 when two major showbiz events - the US presidential elections and the Beijing Olympics - combine for the benefit of the advertising world.

He also mentioned the 2012 London Olympics. While expecting this to further line adland's coffers, he deprecated Britons' negative attitude toward the event. "Sadly it seems to be the focus of a lot of political attention and debate but as we get closer people will get more positive," Sorrell predicted.

He also commented on WPP's acquisition last week of a 49.9% stake in London hotshop Clemmow Hornby Inge [WARC News: 19-Apr-07].

Perhaps acknowledging that half-measures are not normally his style, Sir Martin elucidated: "They're a very good agency but they didn't want to sell control. So it'll be a permanent partnership, they'll keep a half and we'll help them with the other half."

Or vice versa.

Data sourced from; additional content by WARC staff