WPP Reports Global Growth of 4.5% in Year to May

28 June 2006

Put your ear to the ground and you might hear Noitulove revamped for investment bankers . . . "hourly financial reports in 2008 . . . weekly in 2007 . . . five-month updates today . . . quarterly in the 90s . . . half-yearly in the 80s … annually since the dawn of time."

It's no joke. Five-monthly financial updates have already arrived in adland with WPP Group's unveiling yesterday of its trading update for the first five months of 2005.

On Tuesday the globe's second largest advertising holding company reported 4.5% growth in comparable revenues for the first five months of the year. Operating margins for that period were ahead of expectations and in line with the full-year target of 14.5% .

However, the increase - which excludes acquisitions and the impact of exchange rate fluctuations - failed by a whisker to meet the expectations of an analysts' consensus.

A tad of sanity prevailed, however. Although wary of reading too much into two months of data Patrick Kirby, research analyst at Deutsche Bank, opined: "We expect organic growth to improve in [the second half] - reflecting easing comparatives . . . and strong new business wins this year."

Meantime, WPP's specialist communications businesses, including new media operations, were again the company's fastest-growing segment with total revenues up by over 20% .

Regional growth (at constant exchange rates) was led by eastern Europe where revenues rose 49% . In Asia-Pacific, Latin America, Africa and the Middle East, revenues grew 23%. WPP expects the organic, like-for-like revenues contributed by these developing markets to double over the next five years.

Only in the UK did WPP fail to notch double-digit increases, with growth slowing from 9.6% in Q1 to 6% across the five months.

The group also revealed plans to buy back more of its shares this year and now aims to repurchase 2%-3% of its share capital - well ahead of its previous 1%-2% buy-back.

Data sourced from Financial Times Online; additional content by WARC staff