Ad giant upbeat after strong end to 2010
Published 04/03/2011 | 12:16
Advertising giant WPP today boosted annual profits to more than £1bn after finishing 2010 with the fastest rate of growth in a decade.
Like-for-like revenues, excluding acquisitions and currency movements, rose 5.3pc after a stronger-than-expected recovery in mature markets such as the US and Germany and in traditional media, including free-to-air television.
WPP, which is the world's largest advertising and media group, described 2010 as a year of "significant recovery" as businesses bounced back from the collapse of Lehman Brothers in 2008 and a "brutal" 2009.
The like-for-like revenues growth figure accelerated to 8.5pc in the final quarter of last year - the fastest rate since the fourth quarter of 2000 - and included the first monthly double-digit growth since January 2001.
WPP, which owns agencies including Ogilvy & Mather and J Walter Thompson, is hopeful that current trends will be maintained this year as it forecast another 5% rise in like-for-like revenues.
Prospects for 2012 also appear promising due to the London Olympics and US presidential election, but WPP warned there could be a hangover in 2013 as the newly-elected American president wrestles with a ballooning deficit.
WPP said its headline pre-tax profits for 2010 rose 27.3pc to £1.03bn, topping £1bn for the first time.
WPP's UK business, which accounts for around 12pc of group sales, grew annual revenues by 5.7pc in 2010 following a strong end to the year at its line up of brands that includes Oglivy, Grey, Kantar and GroupM.
The company, which is led by chief executive Sir Martin Sorrell, employs more than 146,000 full-staff in almost 2,400 offices worldwide.
It said the balance of revenues growth was shifting from the west to China and India and to Brazil and Latin America.
Sir Martin added: "Clients seem to be increasingly focused on expansion in the faster-growing markets and cost containment and caution in the West. So far this strategy has paid off, with corporate profitability at record highs."
Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers, said: "The turnaround in WPP's fortunes is in marked contrast to the dark days of the financial crisis, with companies beginning to put some of their vast reserves of capital towards advertising their businesses.
"Quite apart from the improvement stateside, other geographies also showed strong signs of profitability, such as China."