British communications services group WPP Group Plc (WPPGY,WPP.L) Thursday reported a 16.2% revenue growth in its third quarter, boosted mainly by strong advertising and public relations businesses as well as favorable currency movements. However, the company expects 2009 to be a 'very tough year', amid ongoing financial crisis.
The company's third-quarter revenues grew 16.2% to GBP 1.719 billion from GBP 1.480 billion last year. On a constant currency basis, revenue rose 6%, as Euro and US dollar strengthened against the pound.
On a like-for-like basis, excluding the impact of acquisitions and currency fluctuations, revenue grew 3.0%.
Based on geographical area, Asia Pacific, Latin America, Africa and the Middle East continued to show strong growth in the quarter, reporting quarterly revenue of GBP 439.0 million, up 29.4% from prior year's GBP 339.2 million.
The company's revenue from Continental Europe grew 25.5% to GBP 459.4 million, reflecting a counter-cyclical strengthening in Western Continental Europe. Revenue from North America rose 7.1% to GBP 596.9 million, while from U.K improved 2.9% to GBP 224.0 million.
By communications services sector, the advertising and media investment management and public relations and public affairs showed the strongest growth in the quarter, with revenues up 18.4% and 17.1%, respectively. This followed by 14.1% revenue growth in branding & identity, healthcare and specialist communications unit and 1.9% revenue rise in information, insight and consultancy business.
For the nine-month period, WPP's revenues were GBP 5.059 billion, a 14.9% increase over GBP 4.40 billion in the previous year. In constant currencies, revenues rose 7.4%.
Excluding the impact of acquisitions and currency fluctuations, like-for-like revenue improved 3.8% in the nine-month period.
Looking ahead, the company said the revenue forecasts for the fourth quarter 'appear cautious', but targets to achieve 10% to 15% operating profit growth per annum.
The company's future objectives included growing revenue faster than industry averages and improving staff cost to revenue ratios by 0.6 margin points per annum.
However, WPP believes that the turmoil in the financial markets, which started in the sub-prime markets in August 2007, accelerated sharply in the last few weeks and is expected to make 2009 a very tougher year.
Meanwhile, a few forecasters believe that financial markets may start to recover by the middle of 2009 and the real world in 2010, the company noted.
On the LSE, WPP.L is trading at 325 pence, down 7.50 pence or 2.41%, on a volume of 2.45 million shares.
WPPGY closed Wednesday's trading at $27.29, up $0.49, on a volume of 189K shares.
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