Like for like revenues rose by four per cent in the year’s first five months, announced WPP Group yesterday. The increase, although below the group’s underlying revenue forecast in April, nevertheless cheered an otherwise gloomy stock market and WPP shares leapt by 6%.
WPP, now relegated to second position in the world rankings after the completion of Interpublic Group’s acquisition of True North Communications, reported headline revenues up by 69% - an exceptional gain due to the first-time inclusion of income from Young & Rubicam Advertising and other acquisitions.
The decline in growth was attributed to weakness in the North American market, which last year was the primary contributor to WPP's exceptional acceleration of 15%. Europe, Asia Pacific and Latin America were also feeling the first twinges of economic cooling.
Despite WPP’s failure to meet its own growth forecast, the group said it remains on target to increase operating margins to 15% in 2000. It also predicted that margins would rise to 15.5% in 2002, eventually hitting 20%.
Informed observers believe this bullish outlook reflects WPP’s continuing move into marketing services [WAMN: 25-Jun-01], a sector yielding higher margins than traditional advertising.
News source: Financial Times