Despite Good 2015, Sorrell Warns Against 'Don Draperish' Optimism

WPP Net Sales Up 3.3% in 2015, Boosted by Strong U.S. Results

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Martin Sorrell
Martin Sorrell Credit: Bloomberg

WPP, the world's largest communications group, reported 2015 net sales up 3.3% to $16 billion on a like-for-like, constant currency basis (excluding acquisitions and exchange rate fluctuations), boosted by 4.1% growth in North America, the group's best-performing region.

Profit before tax was up 7.3% to $2.5 billion, and annual revenues were up 6.1% to $18.7 billion, with all parts of the business except data investment management showing growth.

The fourth quarter was the strongest of the year, with net sales up 4.9%.

In a statement, WPP CEO Martin Sorrell said, "Despite this strong performance, the always on, Don Draperish general industry optimism seems misplaced. To survive in the advertising and marketing sector, you have to remain positive, indeed optimistic… However, general client behavior does not reflect that state of mind."

The group, whose agency networks include Ogilvy & Mather, JWT, Mindshare, MEC and MediaCom, expects net sales growth just above 3% during 2016. Net sales for January this year were up 2.3%.

Mr. Sorrell said 2016 will be boosted by marketing spend on the Olympic Games in Rio de Janeiro, the U.S. presidential election, and European soccer championships. However, he warned of three geopolitical issues creating uncertainty: possible interest rate changes, Britain's referendum on whether to remain in the European Union, and the oil price free-fall.

Helped by the strong dollar, reported revenues in North America were up 15.2% (7.9% at constant currency) to $6.9 billion in 2016 – 36.9% of the communication group's overall revenues.

WPP claimed estimated net new business wins of $8.6 billion in 2015, including the consolidation of L'Oreal USA's $2 billion account into MEC, and General Mills' global consolidation at Mindshare. WPP made 52 acquisitions during the year.

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