WPP Reports Third Quarter Revenue Growth of 3.1%

CEO Sorrell Forecasts 2015 Will Look Like 2014 'Or Slightly Better'

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WPP reported revenue growth of 3.1% to $4.4 billion for the third quarter. The company said that on a like-for-like basis, excluding the impact of acquisitions and currency fluctuations, revenue was up 7.6%.

Martin Sorrell.
Martin Sorrell. Credit: WPP

Looking ahead, the company said "Early indications are that revenues and net sales in the final quarter of the year will show lower growth than the first nine months, with an improvement in Asia Pacific and Africa and the Middle East, offset by a slower North America, continental Europe and Latin America."

For next year, CEO Martin Sorrell said that for the global economy as a whole, 2015 will be "similar or slightly better" than 2014.

"Geopolitical issues are a source of increased client caution," WPP said in its presentation to analysts today. Mr. Sorrell cited Russia, Brazil and Ukraine as concerns that are weighing down clients, in addition to what he called the "black swan" events of the ebola epidemic and political protests in Hong Kong.

"But we remain strongly bullish on China, our third biggest market," he said.

In the third quarter, the fastest-growing areas were the U.K. and North America, with like-for-like growth of 10.2% and 7.8% respectively before accounting for currency fluctuations. North America, with net sales growth of 2.3%, was slower than in the first half of 2014, the company said.

WPP singled out agency networks Ogilvy & Mather and Grey for strong growth in the third quarter. Advertising and media was the best-performing sector, with like-for-like revenue growth over 17% and net sales growth of 5.5%. (WPP also owns agency networks JWT and Y&R, and media agency networks Mindshare, MEC, MediaCom and Maxus).

Mr. Sorrell noted that WPP's net new business is up by $1 billion since Oct. 1, thanks to MediaCom's two big U.S. wins—AB InBev's $575 million account and Bayer/Merck, with spending of $150 million.

He said WPP is trying to differentiate itself from rivals through data and technology, and highlighted the company's investments in U.S. advertising technology businesses AppNexus and Rentrak. He claimed that Publicis Groupe was also trying to buy into AppNexus but withdrew when WPP paid about $25 million for a 15% stake in AppNexus.

Overall currency movements accounted for a 7.5% decrease in reported revenue and 7.3% in net sales, reflecting the overall strength of the British pound against many currencies, particularly in the faster-growth emerging markets.

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