WPP Eyes 2% Full-Year Revenue Gain

WPP Group said it expects full-year revenue to rise about 2 percent this year, boosted by increased ad spending in the U.S. and strong growth in Asia. At the company's annual general meeting today in Dublin, Ireland, WPP said organic growth in the U.S. rose "well over" 5 percent in the first five months of 2010 and climbed 7 percent in April and May. In Asia, organic revenue increased more than 7 percent and in India, nearly 12 percent. Ad spending in the U.K. continues to improve, posting a gain of more than 4 percent in April and May. But Western Europe "remains difficult," the company said, with revenue down slightly and countries like France and the Netherlands the most challenging markets. WPP cited the quadrennial boost from events like the FIFA World Cup in South Africa, the Winter Olympics, the World Expo in Shanghai and the U.S. mid-term congressional elections on operating results. The company said revenue, profit and operating margins continue to be "well above budget" and are ahead of last year, despite continued similar levels of severance in the first five months of 2010 compared with the same period in 2009. In 2009, WPP reduced headcount by 12 percent and with the subsequent improvement in revenue, the company has started hiring again, particularly in faster-growing markets. Overall headcount is up slightly over 1 percent so far this year and "operating companies have released salary increases where deemed necessary, to ease last year's pressures," the company said. Looking ahead, WPP expressed concerns about the spread of the financial problems from Greece, Portugal, Spain and Ireland to other parts of the continent; fears about the impact of the U.K. government's new austerity measures and of similar programs in France and Italy; and concern about the withdrawal of fiscal stimulus in Germany. But the company singled out the U.S. as its major concern. "Perhaps most important of all, fears for U.S. growth later this year, as comparatives get more difficult and next year as the Bush tax cuts end, together with the postponement of any withdrawal of the U.S. fiscal stimulus and its impact on the deficit and as taxes rise on corporate profits," WPP said in a statement. Separately, chancellor George Osborne, the U.K. government official who is the architect of the austerity program, made a personal appeal to WPP CEO Martin Sorrell to return the company's headquarters to England from Ireland where WPP relocated for tax purposes in 2008. Like other U.K. multinationals, WPP -- which derives nearly 90 percent of its revenue outside the country -- was being charged corporate taxes on overseas income. Speaking at a public forum today, Osborne said, "I want to reform the corporate tax system so that international companies locate in Britain rather than leave Britain."

Brand Marketing

WPP Eyes 2% Full-Year Revenue Gain

Noreen O'Leary

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Noreen O'Leary