Advertising firm WPP Plc (WPP.L,WPPGY: Quote) on Thursday hiked its annual dividend by 38 percent after reporting a double-digit growth in fiscal 2011 profit with strong results in all segments along with good cost control. The company also projects revenue and margin improvement in fiscal 2012 citing mainly the impending Olympics and Paralympics in London, UEFA football events, as well as US Presidential election in November.
The company noted that, geographically, the Asia Pacific and Latin America sectors were key contributors to revenues improvement. The Middle East remained the most challenged sub-region. On a functional basis, the advertising, media investment management and direct, digital and interactive segments posted "strong" growth.
For fiscal 2011, pre-tax profit grew 18.5 percent to 1.01 billion pounds and headline pre-tax profit, which excluded certain items, climbed 18.9 percent to 1.23 billion pounds. Including a 51.7 percent decline in taxes, attributable earnings per share climbed 40.5 percent to 64.5 pence, while headline earnings per share grew over 19 percent to 67.7 pence. Including exceptional tax credit, the 2011 headline earnings were 75.6 pence per share, 33.3 percent higher than last year.
Annual revenues climbed 7.4 percent to 10.02 billion pounds, the first time the company has exceeded 10 billion pounds mark, thanks in part to a 5.3 percent increase in like- for-like sales, which excludes the impact of currency and acquisitions. Revenue on a constant currency basis was up 8.4 percent.
WPP noted that January 2012 revenues were in line with forecast, increasing 4 percent on a like-for-like basis. Gross margin also increased similarly.
Looking ahead for fiscal 2012, the company projects like-for-like revenue and gross margin growth of around 4 percent and headline operating margin to improve 0.5 margin points to 14.8 percent.
The forecast reflects the results from faster growing geographical markets of Asia Pacific, Latin America, Africa and Central and Eastern Europe as well as functional sectors of advertising, media investment management and direct, digital and interactive. The anticipated growth will some extent be moderated by the slower growth in the mature markets of the United States and Western Europe, the company noted.
According to the company, the three maxi-quadrennial events of 2012, the UEFA Football Championships in Central and Eastern Europe, the Summer Olympics and Paralympics in London as well as the US Presidential Elections in November should underpin industry growth by 1 percent alone this year.
Over the long term, WPP targets to deliver revenue and gross margin growth greater than the industry average and improvement in operating margin of 0.5 margin points or more. The company also projects annual pre-tax profit growth of 10 percent to 15 percent per annum delivered through revenue growth, margin expansion and acquisitions
Further, the company said its Board declared an increase of 45 percent in the second interim ordinary dividend to 17.14 pence per share, making a total for the year 2011 of 24.60 pence per share, an overall increase of 38.3 percent.
WPP shares are currently trading at 831.50 pence, up 28 pence or 3.48 percent in London.
by RTT Staff Writer
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