WPP’s Q3 Growth Disappoints

BOSTON WPP Group today said its third-quarter revenue rose 4.9 percent to approximately $3 billion, an 8 percent increase in constant currency terms, compared to the same period a year ago. On a like-for-like basis, excluding the impact of currency fluctuations and acquisitions, Q3 growth was 5 percent.

The London-based conglomerate blamed the weak U.S. dollar for holding back revenue growth and causing the company to miss analysts’ growth estimates, which had generally been more than 5.5 percent.

By mid-Friday, WPP’s shares had fallen more than 40 cents, losing about 5 percent of their value.

For the first nine months of 2007, WPP’s global revenue rose about 3 percent to approximately $9 billion, compared to the same period in 2006. On a constant currency basis, the growth is about 8 percent. On a like-for-like basis, the nine-month improvement is slightly more than 5 percent.

According to the company, “Despite concerns about the impact of the recent liquidity crisis on levels of client spending, there has, as yet, been little or any effect on spending levels across the board, both functionally and geographically.” WPP added, “We continue to believe that 2008 will be a good year for the industry, better than 2007, reflecting the positive combined impact of the maxi-quadrennial events of the U.S. presidential election, the 2008 Olympics in Beijing and, on a relatively more modest basis, of the European football championships.”

The company did, however, inject a note of caution past 2008: “We also continue to believe that a more important concern should be the impact that any new U.S. administration will have on 2009—when they have seen the government’s books and will be tempted to dispense any politically unpleasant medicine to the electorate, early in the potential eight-year political cycle. Whilst the new rapidly-growing parts of the world are no longer as dependent on the U.S. for growth, as they used to be, it is still true that when the U.S. sneezes the rest of the world catches a cold.”

In terms of Q3, WPP’s best performance was in Asia Pacific, Latin America, Africa and the Middle East, where sales climbed nearly 14 percent. North American sales rose 8 percent, while U.K. sales improved 5 percent. Continental Europe grew 5.2 percent, with Central and Eastern Europe up over 25 percent.

WPP is the parent of JWT, MindShare, Ogilvy & Mather and Young & Rubicam, among many others.

The company is seeking to expand in the digital space, and in May agreed to acquire online ad company 24/7 Real Media for nearly $650 million.