WPP First-Quarter Revenue Down 5.8%

U.S. Worst Performer, as Other Regions See Double-Digit Growth

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LONDON (AdAge.com) -- WPP's revenue was down 5.8% for the first three months of this year, excluding currency fluctuations and acquisitions, the advertising company said in a trading update today.

Even including revenue from the acquisition of Taylor Nelson Sofres in October, the U.S. was by far the worst-performing region, with revenue down less than 1%. In the U.K revenue was up 16%, just above Asia Pacific, Latin America, Africa and the Middle East, where growth was 15%. Continental Europe fared best, with almost 25% growth.

Operating margins are also suffering in the recession and are down from last year, partly due to severance costs, although almost a third of the holding company's staff cuts were due to attrition rather than layoffs.

Staffing at the end of March was down 2% from the previous year to 109,408, a fall of 2,280. Further cuts are also anticipated. The company said it is focusing on "balancing the likely fall in revenues against staff costs and head count."

WPP expects things to pick up in the second half of the year, but primarily due to a lower base for comparison. "The first half of 2009 will clearly be very difficult, with the second half, although continuing to be tough, likely to improve relatively. Any recovery, of sorts, will probably come in 2010."

Net debt as of March 31 was $5.5 billion, compared with $3.8 billion in 2008 (at constant exchange rates), an increase of $1.68 billion. The company claims a market capitalization of $8 billion and an enterprise value of $13.5 billion.

Despite the overall gloom, revenue rose 36% to $3 billion, helped by a weak sterling and the acquisition of TNS in October. The belief at WPP is that the economic situation is encouraging account reviews and consolidations, which helped increase new-business billings $1.5 billion from last year.

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