Revenue Growth Expected to Continue in 2005

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NEW YORK (AdAge.com) -- WPP Group reported strong 2004 results and forecast a good 2005, with revenue growth driven by improvements in economies around the world.

WPP, the parent of agency networks Ogilvy & Mather Worldwide and JWT, posted a 57.2% increase in net income, to $563.2 million, on revenues of $8.28 billion, up 11.4% from 2003.

Revenue growth came across the board, with the U.S. growing 9.7%, the U.K. rising 9.6% and continental Europe up 7.6%. Combined revenues from the Asia-Pacific, Latin America, Africa and Middle East regions grew 23.7% for the year, passing $1 billion for the first time.

Marketing disciplines
Among marketing disciplines, advertising and media revenues were up 10.8%; information and consultancy rose 17.3%; public relations, which suffered inordinately during the recession, was up 6.5%; and health care and specialist communications went up 14.6%. Media was a strong contributor to new billings, which hit $6.83 billion in 2004, $3.2 billion of which came from media-buying and -planning accounts.

WPP management forecast the streak will continue in 2005, in spite of the lack of large events, such as the national elections in the U.S. or Olympic Games last year, to spur growth. The company is forecasting 3% to 4% revenue growth on an organic basis, after factoring in acquisitions and currency fluctuations, slightly better than the 2% to 3% it forecasted for the ad industry as a whole. January revenues are up 6% and WPP (along with Grey Global Group) has net $600 million in new business so far this year.

Beat expectations
The results beat analysts' expectations by a wide margin. In a report to investors, Numis Securities analyst Lorna Tilbian gave WPP's stock a "buy" recommendation, saying, "We believe the group has several years of cyclical growth ahead of it."

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