Advertising firm WPP Group Plc. (WPPGY, WPP.L) Friday reported higher pre-tax profit for the year, amid a strong performance in the emerging markets. However, profit attributable to equity holders of the parent fell as a result of higher taxation. Further, WPP said like-for-like revenues were ahead of budget in January.
Pre-tax profit for the year rose 8.3 percent to 1.092 billion pounds from 1.01 billion pounds in the prior year. Headline profit before tax was up 7.2 percent to 1.317 billion pounds or up 12.3 perent in constant currencies.
However, profit attributable to equity holders of the parent fell to 822.7 million pounds from 840.1 million pounds due to the exceptional release of prior year tax provisions in 2011. Earnings per share fell to 62.8 pence from 64.5 pence.
Excluding the impact of the exceptional tax credit, attributable profits would have risen 12.1 percent to 823 million pounds.
The company recorded exceptional gains of 102 million pounds on sales of stake in Buddy Media and New York property and incurred restructuring charges of 93 million pounds chiefly for Western Continental European businesses and IT infrastructure.
Revenue increased 3.5 percent to 10.373 billion pounds from 10.022 billion pounds in the previous year. On a constant currency basis, revenue advanced 5.8 percent.
Like-for-like revenue growth was 2.9 percent and acquisitions contributed 2.9 percent, while currency impact was a negative 2.3 percent.
Gross margin of 2.4 percent reflected pressure on gross margins in the Group's consumer insight custom businesses in the mature markets of North America, the U.K. and Western Continental Europe.
Billings slid 0.9 percent to 44.405 billion pounds, primarily reflecting the strength of the pound sterling, while it was up 1.6 percent in constant currency due to leadership position in net new business league tables.
Revenue climbed 4.7 percent in North America to 3.547 billion pounds, while the U.K. saw a 7.7 percent increase at 1.275 billlion pounds. While Western Continental Europe experienced difficulty, Asia Pacific, Latin America, Africa & the Middle East and Central and Eastern Europe improved revenues by 5.7 percent to 3.112 billion pounds.
Sector-wise, Advertising and Media Investment Management witnessed a 2.8 percent growth at 4.273 billion pounds. Of the Group's advertising networks, Ogilvy & Mather saw a strong performance.
Consumer Insight revenues edged up 0.1 percent to 2.46 billion pounds. According to the company the pattern of revenue growth seen in the first nine months continued into the final quarter, with North America and Continental Europe difficult, but counterbalanced by strong growth in the faster growing markets.
Public Relations and Public Affairs revenues advanced 3.6 percent to 917 million pounds, amid continuing pressure in North America and Continental Europe.
Branding and Identity, Healthcare and Specialist Communications revenues advanced 8 percent to 2.723 billion pounds. AKQA, a digital agency acquired in July 2012, performed well with full year like-for-like revenues increasing 10 percent.
The Board recommended a final dividend of 19.71 pence per ordinary share, compared to 17.14 pence per share announced last year.
Further, WPP said like-for-like revenues were up over 2 percent in January, ahead of budget and similar to the final quarter of 2012.
The full year target is for like-for-like revenue and gross margin growth of around 3 percent and operating margin improvement of 0.5 margin points.
The stock is up around 2.37 percent in early morning trade on the LSE at 1,079 pence.
by RTT Staff Writer
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