WPP’s Results Lift Shares – and Two Fingers to Morgan Stanley

28 April 2003

WPP Group on Friday raised a duo of digits to investment bank Morgan Stanley, which last week predicted the agency holding company, now number three in the world pecking order, was poised to post an 8.8% fall in total revenues for the first quarter of 2003 [WAMN: 24-Apr-03].

But although group revenues were down on the same period last year, WPP confounded Morgan and the other second-guessers with a downturn of less than four per cent. On a like-for-like basis (with acquisitions and currency fluctuations factored out), revenues were unchanged year-on-year.

First quarter operating margins were in line with budget, which indicated full year improvement of up to one margin point.

On a constant currency basis, the geographical pattern of revenue growth varied induring Q1. In North America, revenues were up by over 1%. In Europe, the UK was down over 3% and continental Europe up over 3%. Asia Pacific, Latin America, Africa and the Middle East were up over 3%.

But it was on the new business front that Sir Martin Sorrell’s troops made their lightning advance. Net business gains during the quarter hit £410 million ($651.12m; €590.11m) – achieving top ranking in Credit Suisse First Boston’s absolute and relative net new business survey for Q1.

Said Sorrell in an interview with CNBC TV: “We are seeing significant signs of stabilisation. The trend of the first quarter is a little encouraging, but 2003 will continue to be difficult.” He repeated his mantra that revenues will remain flat this year, but start to recover in 2004.

WPP shares rose 3.2% to £4.37 in early trade on the London market, losing ground later to close at £4.30 – albeit still up on the day by a modest 1.53%.

Data sourced from: WPP Group and BBC Online Business News (UK); additional content by WARC staff