Ad group WPP upgrades outlook after strong Q1
WPP, the advertising group that is relocating its tax base from Dublin to London, upgraded its 2011 outlook yesterday as it posted first-quarter organic sales ahead of its peers due to strength in the US and faster-growing markets.
Martin Sorrell's group, the world's largest by sales, said it was cautiously optimistic about 2011 and 2012, despite a host of economic concerns on the horizon, and it now expects like-for-like revenue growth to be over 6pc, compared with an earlier forecast of 5pc growth.
Mr Sorrell said last month his agency would be shifting its tax base back to the UK after two years in Ireland following the British government's pro-business budget.
"To lift forecasts at this stage of the year really gives an indication of the confidence they have in the business," analyst Paul Richards at brokerage Numis said.
"In terms of sentiment it does feel the strongest of the agencies that have reported so far."
Numis raised its profit and earnings forecast for 2011 and 2012 and said it saw scope for further upgrades later in the year.
Shares in the firm, which had fallen more than 6pc in April over fears of a drop in advertising momentum, were up 2.9pc to 781.5p by the close in London
WPP, whose ad agencies include JWT and Ogilvy & Mather, said like-for-like revenue was up 6.7pc in the first quarter compared with a Reuters poll forecasting 6.9pc, putting the British-based group marginally ahead of its peers.
The results follow slightly disappointing numbers from rivals Omnicom, which reported first-quarter organic growth of 5.2pc, and Publicis, which reported organic growth of 6.5pc.
"The first quarter has been good and we're feeling a bit more optimistic about the year," Mr Sorrell said.
"We're doing okay, we're seeing growth everywhere so it's good stuff."
WPP said the strong performance from more mature markets such as the US and Germany and more traditional media such as free-to-air TV had continued in the first quarter, while faster-growing markets such as Asia Pacific and Latin America had picked up.
Western companies flush with cash but reluctant to spend on long-term investments given tricky economic conditions in 2010 instead spent heavily on branding and advertising to protect market share, explaining WPP's strong rebound in certain markets last year.
WPP also said it could beat its target of a 0.5 margin point improvement, which was welcomed by analysts. It had set a target for operating margins to rise to 13.7pc. (Reuters)