WPP Posts 5% Growth in 1Q, Optimistic About Rest of 2012
WPP fared better than expected during first-quarter 2012, with revenue up 5.5%, to $3.76 billion, and profit ahead of the year-earlier period.
The world's largest agency holding company didn't release profit details.
During a call with analysts, CEO Martin Sorrell said he was optimistic about the remainder of the year and does not anticipate the "deceleration" that Maurice Levy, chairman-CEO of rival Publicis Groupe , forecast for the second quarter.
WPP is the parent of creative agencies such as Ogilvy & Mather and JWT and the world's biggest media buyer, Group M. The company picked up $1.85 billion in new business in the quarter, with sizable assignments for L'Oreal in Germany, airline Eithad Airways and Levi Strauss & Co.
There were some client exits in the the quarter as well. Media agency Mindshare lost its its Sprint media business, worth $1 billion, to Publicis, while Grey and Ogilvy lost smaller accounts with GlaxoSmithKline and Kraft, respectively.
Asia and Latin America were the geographic regions leading growth, WPP said, with countries such as Argentina, Brazil, China and South Korea growing first-quarter revenue more than 15% year-over-year.
During the quarter, almost 31% of revenue came from direct, digital and interactive services, up 2 percentage points year-over-year.
WPP also ramped up acquisitions. It spent almost $44 million on 14 deals and increased equity stakes in the first quarter, up 50% from a year earlier. Recent purchases of Hungarian agency Carnation and social-media research firm CIC Data, as well as investments in DT Digital in Australia and mysupermarket.com were designed to further enhance digital capabilities.
Mr. Sorrell has said in the past that WPP is optimistic about 2012, because of higher ad spending around the London Olympics, UEFA Football Championships and the U.S. presidential elections. But he also again warned that 2013 could be more challenging, without any major events to propel spending.
"The big question going into 2013: What's going to happen to the U.S. economy?" said Mr. Sorrell on the conference call.