WPP Cuts Full-Year Growth Forecast
WPP, the world's biggest advertising holding company, cut its full-year growth forecast as clients in North America and continental Europe reduced spending.
In a statement, Chief Executive Martin Sorrell said revenue excluding the impact of acquisitions and currency fluctuations will grow "close to 3.5%" this year vs. an earlier forecast of 4%.
Earnings before interest, taxes, depreciation and amortization rose 10% to 1.08 billion in the first half.
As part of its financial report, the holding company confirmed that given revamped tax rules, it will return its headquarters to the U.K. from Dublin and noted it earned $62 million on its sale of a stake in Buddy Media, which was purchased by Salesforce.com earlier this year.
Mr. Sorrell said in March he planned to spend between $475 million and $630 million on acquisitions this year. WPP last year bought almost three dozen companies or units and in the first half of this year made 40 acquisitions, the company said today, and that includes one massive one -- its purchase of a majority stake in AKQA this summer -- and well as several acqusitions that are being made to beef up WPP's new digital network, Possible.
"We're in a difficult client spending environment," Will Smith, an analyst at Jefferies in London, said in an interview with Bloomberg News. "They've turned many acquisitions but it shows the industry is having a difficult time finding growth." Organic sales rose 3.6% in the first half; Mr. Smith had forecast 4%.
Revenue in Western Europe dropped 3% in the second quarter. WPP said 2013 would be "more challenging" in the absence of a major event such as the Olympics or U.S. presidential election to boost spending.
WPP's own entity, Group M, last month cut its forecast for worldwide ad growth in 2012 to 5.1% from 6.3%, citing a decline in ad investment of 8.8% in Greece, Ireland, Italy, Portugal and Spain. Ad spending in the U.S. is predicted to grow, but at a slower clip--3.6%, from a 4% forecast late last year, Group M said.
-- Bloomberg News with additional reporting by Ad Age --