BOSTON WPP Group today said its organic revenue, excluding the impact of acquisitions and currency fluctuations, improved 4.5 percent in the first five months of 2008 compared to the same period a year ago.
On a constant currency basis, the gain was a bit over 8.5 percent, mainly reflecting the strength of the euro against the U.K. pound sterling. Overall, the company's global revenue rose 14.5 percent.
WPP, the No. 2 global holding company, released the trading update -- though not specific figures -- today at its annual general meeting in London.
The performance was generally viewed as disappointing by analysts, who had expected the holding company's business to improve in Q2 following 5 percent organic growth in the first quarter of the year.
"WPP has the right business model and is doing the right things, but the economic climate is currently rather unfavorable for advertising companies," Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe, told Bloomberg today.
And in a note issued ahead of WPP's statement today, Citigroup had also said it expected WPP's organic growth to exceed its Q1 performance.
The company noted predictions that "the world economy is in for a bumpy ride," offering solace that "it is in times like this that we should be particularly appreciative of the unusual nature of this group" in terms of diversity of services, client categories and geographic operations.
Geographically, on a constant currency basis, all regions showed fairly strong growth, with Central and Eastern Europe climbing 21 percent and the Asia Pacific, Latin America, Africa and Middle East up 18 percent. Growth in all other regions, including the U.S., was between 5-7 percent.
By communication sector, advertising and media rose about 4.5 percent; consultancy services climbed 8 percent; PR and public affairs gained about 10 percent; and branding, identity and healthcare spiked nearly 16 percent.
Operating margins in the first five months are ahead of budget, with full-year forecasts in line with its full-year margin objective of 15.5 percent (compared to 15 percent in 2007), per WPP.
Late Tuesday aftrenoon, WPP's shares were trading at $49.08 on the Nasdaq exchange, down about $2.00 -- or nearly 4 percent. The 52-week high is $76.53, the low is $48.94.
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