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WPP Reports Record $1.45 Billion Profit for 2011

Predicts Company Will Fare Well in 2012, but 2013 May Be Challenging

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WPP reported record profits of more than $1.45 billion for 2011, up a whopping 43% from the year prior, and the holding company expects to see continued momentum in 2012 due to increased ad spending for the U.S. presidential election and this summer's Olympic games.

Reported revenue for WPP -- the biggest ad holding company in the world and home to creative agencies such as Ogilvy & Mather, JWT, and media-buying behemoth Group M -- was up 11.4% year-over-year to $16.05 billion.

However, WPP's CEO-Executive Director Martin Sorrell predicts a darker cloud looms for 2013, as there are no big events to bolster ad spending, and political ad dollars will drop off following the election.

"We think 2012 looks similar to 2011, maybe at a slightly reduced level," said Mr. Sorrell. "But the one big cloud on the horizon we feel the need to address in 2013 is deficit reduction after the U.S. election."

WPP said North America performed well. And while the debt crisis is impacting growth in Europe, the company said it still fared well in the region overall thanks to strong growth in the U.K. and acquisitions in Western Continental Europe.

The company reported that Austria, Germany, Switzerland and Turkey all showed strong like-for-like growth for the year, but France and especially Greece, Portugal and Spain remained affected by the Eurozone debt crisis.

"There's no doubt that the continued uncertainties and the lack of political action -- or coordinated political action -- is holding back growth in the region, and to some extent, the U.K.," Mr. Sorrell said. "Frankly, it does look like a continuous slog."

In 2011, nearly 30% of WPP's revenue came from Asia Pacific, Latin America, Africa and the Middle East, and Central and Eastern Europe. The company said that emerging markets in Asia, Latin America, Africa and Eastern Europe represent the highest growth regions for WPP. Additionally, revenue from North America grew, but the outlook in the Middle East is not so bright.

"One area where we've seen a heightened uncertainty is the Middle East," Mr. Sorrell said. "The Arab Spring has brought a little bit of diminution in confidence after the events we saw in North Africa and continue to see in the Middle East."

WPP plans to spend between $470 million and $630 million on acquisitions this year, Mr. Sorrell said. The focus will remain on small and medium-sized agencies, particularly those in new markets or specializing in digital work, data analytics and technology.

The past year saw a number of digital agency acquisitions, including: F. biz and Gringo in Brazil; Rockfish and Lunchbox in the U.S.; Who Digital in Vietnam; Promo in Russia and A4A in China. The company made a total of 38 acquisitions and 10 investments in 2011.

WPP has also added back jobs in the past year. It reported that it currently employs over 158,000 full-time people, up by approximately 12,000 from the prior year.

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