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WPP Q3 Revenue Rises On US Growth

10/24/2013 4:05 AM ET

Advertising giant WPP Plc. (WPP.L,WPPGY: Quote) Thursday said revenue in the third quarter increased over 7 percent from last year, benefiting from growth across all geographies and sectors. On a like-for-like basis, quarterly revenues advanced 5 percent, ahead of the 3.3 percent growth in the first nine months.

WPP, which owns agencies Young & Rubicam and Ogilvy & Mather, said provisional forecasts for the fourth quarter show a rate of growth similar to the first nine months.

Revenue increased 7.4 percent to 2.68 billion pounds and grew 6.4 percent at constant currency exchange rates.

North America showed a revenue increase of 7.2 percent with strength seen in advertising and media investment management, data investment management, as well as the Group's healthcare and specialist communications businesses.

The U.K., which saw a 13.2 percent increase, witnessed strong performances from advertising and media investment management, direct, digital and interactive and branding and identity businesses.

Revenue increased 9.6 percent in Western Continental Europe, although still generally challenged macro-economically, and grew 2.7 percent on a constant currency basis.

In Asia Pacific, Latin America, Africa & the Middle East and Central and Eastern Europe, reported revenues were 3.6 percent higher, while currency-neutral revenues climbed 7.3 percent.

On a like-for-like basis, quarterly revenues advanced 5 percent, reflecting increased momentum. There was a significant increase over the previous quarter and first half growth rates across all geographies and business sectors, particularly in July and September and in North America and Continental Europe.

Functionally, as in 2012 and the first half of 2013, advertising and media investment management showed the strongest like-for-like growth, with branding and identity, healthcare and specialist communications coming well above the average.

Business sector-wise, advertising and media investment management revenues climbed 8.2 percent, with like-for-like growth of 6.6 percent, making the sector the strongest performing.

At Branding & identity, healthcare and specialist communications businesses constant currency revenues climbed 8.9 percent, with like-for-like growth of 5.7 percent.

WPP said it is in the process of reviewing its third-quarter revised forecasts, but early indications are that revenues in the final quarter of the year would grow at a similar rate to the first nine months. An improvement in Asia Pacific will be offset by a slower growth rate in the U.K. and Western Continental Europe.

Functionally, all business sectors, except public relations and public affairs, are forecast to grow at a similar rate to the first nine months.

For 2013, like-for-like revenue and gross margin growth is estimated to be over 3 percent. The company targets operating margin improvement of 0.5 margin points in line with full year margin target.

WPP said it is well positioned to deliver its long-term target of above industry revenue growth and annual profit before interest and tax of 10 to 15 percent per annum, delivering margin expansion of 0.5 point or more.

WPP's peer Omnicom Group Inc. (OMC), which has agreed to merge with Publicis Groupe SA (PUBGY.PK, PGPEF.PK), recently reported a 2.5 percent growth in third-quarter revenue.

Earlier this month, Publicis had said that its third-quarter revenue increased 3.0 percent from last year, with an organic growth of 3.5 percent, reflecting a sharp increase in digital activities. The company also confirmed its expectations for organic revenue growth for full year 2013.

WPP.L is up 2 percent in early morning trading on the LSE at 1,339 pence.

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by RTT Staff Writer

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