BOSTON Reduced ad spending in some European markets slowed WPP Group's first-quarter performance, though the company's revenue still rose 14 percent to about $3.1 billion, the world's second-largest agency holding company said today.
In constant currency terms, the gain was 9 percent. On a like-for-like basis, factoring out the impact of acquisitions and currency changes, growth was slightly less than 5 percent.
WPP said it remains on target to achieve an operating margin of 15.5 percent this year.
The U.K.-based firm said the first two months of the year were strong, but noted that "March was slower, somewhat surprisingly in Western Continental Europe," with Germany, France and Spain starting to lag. Also a surprise, according to WPP, was the "relatively strong" performance in North American operations.
In North America, Q1 revenue was up 10 percent (5 percent like-for-like) compared to the same frame in 200. In constant currency terms, Western Europe rose just over 3 percent. WPP's Asia-Pacific, Latin America, Africa and the Middle East region -- a growth engine for holding companies in recent years -- was up 15 percent. Eastern Europe was the top gainer at 21 percent.
WPP CEO Martin Sorrell, who famously quipped last year that he did expect a recession, said today during a Bloomberg TV interview that March was a "strange month," and he also noted that ad spending could slow in 2009 as a new administration takes over the White House.
Analysts seemed generally disappointed. "Overall these results are likely to be seen as disappointing, given expectations of a robust quarter, although we expect not to see any significant earnings downgrades for the full year, given the reassuring comments on the outlook," UBS said in a note to clients, according to Reuters.
Two of WPP's competitors reported Q1 results earlier this week. Omnicom, the largest holding company, said Q1 revenue rose 12.5 percent, while Havas reported a 2.5 percent gain (but 7.4 percent in organic terms).
WPP holdings include Ogilvy & Mather, JWT, MindShare, MEC and many others.