"We've got a strengthening of the business" overall in the quarter, said Chief Executive Martin Sorrell, speaking to analysts on a conference call. WPP management said new-business activity is running at an "unprecedented level." New-business billings for the quarter were $427 million and $3.19 billion for the first nine months.
Numis Corp. analyst Lorna Tilbian expects similar growth for the fourth quarter and sees a "clear trend of accelerating growth" for the first three quarters of 2005. Mr. Sorrell said spending is picking up in the financial-services and information-technology industries.
WPP Group Finance Director Paul Richardson said "there are still concerns about the prospects of the U.S. economy after the presidential election." Absent the help from the Olympic Games and political spending, WPP is projecting a slight slowdown in growth in 2005. On a geographic basis, revenue rose the most in the Asia/Pacific region, Latin America, Africa and the Middle East region, which was up 22.4%. The U.K. and Continental Europe combined delivered a 18.9% increase over the previous period, while North America revenue rose 10.4%.
Information, insight and consultancy, with an 18.3 % revenue increase in the quarter, was the strongest-performing sector. It was followed by branding and identity, health-care and specialist communications, up 13.5%. Up 9.3% over last year's third quarter, advertising and media investment management edged out public relations and public affairs, which reported the weakest performance, with an increase of 8.6%.
However, for the nine-month period, the top-performing sector was branding and identity, health-care and specialist communications, up 16.8%, followed by advertising and media investment management, up 12.8%. Information, insight and consultancy rose 10.3%, while PR and public-affairs revenue finished last, with a rise of 7.7%.
WPP expects its acquisition of Grey Global Group, announced Sept. 13, to be completed in early 2005. On a conference call to investors, Mr. Sorrell said that midsize competitors, including Aegis Group and Havas, will find it increasingly difficult to remain independent.
"I think ... there'll be some changes in the middle ground," he said, noting French financier Vincent Bollore's increasing stake in Havas, and rumors that Omnicom Group is "looking at Aegis." An Aegis spokesman dismissed the comment as "rubbish." An Omnicom spokeswoman declined to comment.
WPP Group (WPPGY)
Third quarter 2004
Revenue: $1.97 billion, up 4%
Net income: N/A*
*WPP Group reports full results on a half-year basis
Source: Company reports Percent changes are vs. year-ago period