After ‘Brutal’ ’09, WPP Predicts Q2 Organic Growth Return

WPP Group, the largest global agency holding company, today predicted a return to organic growth in the second quarter as it reported rough full-year 2009 numbers. Pre-tax profit fell 16 percent in ’09 to about $1.22 billion on an 8 percent like-for-like drop in revenue to approximately $13.1 billion.

The Ireland-based firm said its revenue decline was slower in the second half — and down 7 percent in Q4 — which bodes well for 2010.

WPP in its earnings statement called ’09 “a brutal year overall.” The numbers reported today were at the low end of most analysts’ expectations, but generally in line with the ad industry as a whole.

Most of WPP’s key competitors — notably Omnicom Group and Publicis Groupe — suffered similarly distressing financial performances last year, but said their last two quarters showed improvement. Omnicom, the No. 2 player, suffered a 6.3 percent Q4 organic decline and its revenue was down 12.3 percent for all of ’09. Net income tumbled 20.7 percent for the year. Only Canada’s MDC Partners bucked the trend with mildly upbeat numbers, but it’s by far the smallest player, and its modest base makes gains easier to achieve.

A return to organic growth in Q2 would mark WPP’s first upswing after six quarters of decline. Organic growth factors out the impact of acquisitions and currency fluctuations.

The recently completed Vancouver Winter Olympics, along with the upcoming FIFA World Cup, Asian Games, World Expo in Shanghai and U.S. congressional elections, should help drive the ad business this year, WPP said.

Overall, global like-for-like revenue in 2010 is expected to be flat, the company said, with most sectors “budgeted to grow at a modest rate” compared with ’09. One notable exception is traditional advertising, “which remains challenged by clients’ demands for efficiency,” per WPP.

Operating margins should rise 1 point to 12.7 percent in 2010.

During ’09, the company cut about 14,000 employees, almost 12.5 percent of its workforce.

The company owns Ogilvy & Mather, Grey and Mindshare, among many others. Its top clients include Unilever and Ford.

See also:

“IPG’s Income, Revenue Plummet”

“MDC Posts Q4 Organic Gain”

“Despite Organic Slide, Publicis Says Recovery Has Begun”

“6.3% Organic Decline for Omnicom in Q4”

“Havas Sees 4.4% Organic Slide”