The world’s largest advertising company, WPP PLC said its third quarter revenue for the year rose by 23.4% year on year with recorded growth across Africa, Middle East and Europe.
Third quarter reported revenue went up by 23.4% at £3.611 billion, up 4.6% at $4.741 billion, up 4.2% at €4.248 billion and down 12.3% at ¥485.4 billion year on year.
As predicted by analysts covering the company, WPP PLC outperformed the market when compared to Publicis Groupe, the second largest advertising group reported two weeks ago that its revenue fell by 0.4% to EUR2,315 billion. Last year, the company reported gross revenue of EUR2,325 billion.
The result noted that there was “constant currency revenue growth in quarter 3 in all regions and business sectors, except data investment management, with particularly strong growth geographically in Western Continental Europe and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, the latter partly the result of acquisition activity. Functionally, advertising and media investment management, public relations and public affairs and branding & identity, healthcare and specialist communications (including direct, digital and interactive), also grew strongly, the latter again, partly, as a result of acquisitions”.
As an outlook for the coming quarters, WPP PLC noted that:
- FY 2016 quarter 3 revised forecast | remains to be formally reviewed first two weeks in November, but indicates like-for-like revenue and net sales growth of over 3%, with the gap between revenue and net sales growth narrowing further, and despite the characteristic caution in the fourth quarter forecast, in comparison to the budget and quarter 1 and quarter 2 revised forecasts. Headline net sales operating margin improvement, as targeted, of 0.3 margin points in constant currency, with reportable margins likely to be even stronger
- Dual focus in 2016 | 1. Stronger than competitor revenue and net sales growth (although competitors do not provide the latter metric) due to leading position in both faster growing geographic markets and digital, premier parent company creative position, new business, horizontality and strategically targeted acquisitions; 2. Continued emphasis on balancing revenue and net sales growth with headcount increases and improvement in staff costs to net sales ratio to enhance operating margins
- Long-term targets | Above industry revenue and net sales growth due to geographically superior position in new markets and functional strength in new media, in data investment management, including data analytics and the application of new technology, creativity, effectiveness and horizontality; improvement in staff cost to net sales ratio of 0.2 or more depending on net sales growth; net sales operating margin expansion of 0.3 margin points or more on a constant currency basis, with an ultimate goal of almost 20%; and headline diluted EPS growth of 10% to 15% p.a. from revenue and net sales growth, margin expansion, strategically targeted small and medium-sized acquisitions and share buy-back.
WPP does not own any equity stake in all Nigerian agencies it is affiliated with. The company severed its relationship with Prima Garnet Ogilvy in 2012 when ScanGroup, WPP’s subsidiary was blocked from operating a parallel operations in Nigeria.
