BOSTON WPP Group today shrugged off talk of a global economic downturn, predicting a strong 2008 performance as it posted a 7 percent rise in 2007 profit to slightly more than $1 billion on a 5 percent gain in revenue to about $12.3 billion, compared to the previous year. (In terms of constant currencies, revenue rose 8 percent, according to WPP.)
The London-based holding company, led by CEO Martin Sorrell, said in a statement that based on preliminary January 2008 data that show a 5 percent improvement in comparable year-ago revenue, he expects the current year to be an improvement on 2007.
"On the basis of these data, 2008 should be a better year than 2007, against the views of most economic forecasters, who predict a gloomy 2008," WPP said, pointing to the continued expansion of WPP clients and anticipated growth in emerging markets.
Sorrell has been on record as saying there would be no recession, a stance the company maintained in its earnings statement today.
The company did, however, caution that 2009 would likely be rougher going as the U.S. economy especially begins to slow down -- though events like the FIFA World Cup and Vancouver Winter Olympics should jump-start growth by 2010.
WPP reiterated its operating profit margin targets of 15.5 percent in 2008 and 16 percent in 2009.
The company closed out '07 on a high note, bolstered in Q4 by major account wins from Dell and AT&T. All told, the company added approximately $10 billion in net new business last year. WPP is now forming DaVinci, an agency focused solely on Dell.
WPP ranks second to New York-based Omnicom Group among the global holding companies. Omnicom last month posted a full-year 13 percent net income gain to $976 million on a nearly 12 percent rise in revenue to $12.7 billion. Both Omnicom and WPP performed best last year in international markets.
In 2007, a nearly 11 percent revenue gain in the Asia-Pacific, Latin America, Africa and Middle East region helped offset slower growth in North America, where sales grew slightly less than 4 percent.
WPP's performances in China and India were especially robust, with full-year revenue in those regions growing more than 30 and 20 percent, respectively.
In terms of communications sectors, public relations and affairs tallied best last year, notching growth of more than 8 percent. Branding and identity grew 6 percent, while traditional ad services improved 4.5 percent.
WPP also today said it had bought a majority stake in Team Y&R Holdings, a Middle Eastern advertising and marketing company. Terms were not disclosed. Last year, the company made more than 30 acquisitions worldwide.