Chief Exec Says Full Recovery not Expected Until 2004

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NEW YORK (AdAge.com) -- Agency holding company WPP Group, parent of global advertising networks Ogilvy & Mather Worldwide and Young & Rubicam, today announced net earnings declined nearly 70% for 2002.

The company reported net earnings for the year ended Dec. 31, 2002, of $139,700, vs. $430,530 for the year ago period. Diluted earnings per share were 12 cents compared to 37 cents a share in 2001. Net revenue, at $6.2 million, fell nearly 3%, from 2001's $6.3 million.

Today's numbers are preliminary; final numbers will be released in May after an auditor's review.

U.S. revenue down
Overall revenue was down 6% after factoring out currency fluctuations and acquisitions, Finance Director Paul Richardson said. U.S. revenue was down for the year but showed improvement by year-end, when WPP posted an increase in the fourth quarter, the first positive quarter out of the past seven, he said.

But Chief Executive Martin Sorrell said U.S. revenues dropped again in January by 1%, as clients became more cautious over the possibility of war in Iraq. The military action is "the rogue factor" in 2003, Mr. Sorrell said. The year appears as "another difficult year [but] not as difficult as 2002," he said.

WPP is targeting organic revenue growth of 0.5% in 2003, with operating profit growth of 5% to 10% for the year. A full recovery will have to wait until 2004, he said.

WPP said it plans to make strategic acquisitions in 2003, but mainly in the marketing services and consultancy fields and outside of the U.S. Mr. Sorrell singled out France as a market where WPP does not have a large presence.

Another talked-about acquisition, of Interpublic Group of Cos.' NFO Worldwide, did not work out, however. Mr. Sorrell said WPP bid on the market research company, but "we got blown out in the first round." U.S. acquisitions remain richly priced, even private transactions, he said.

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