Daily Research News Online no. 9661 - Insight Helps Drive Growth for WPP

Insight Helps Drive Growth for WPP

March 6 2009

WPP has reported healthy results for the full year 2008. Like-for-like revenue growth of 2.7% came from a combination of a strong first half and slower second half. Insight division Kantar provided 17.1% of all WPP revenue and 12.8% of operating profit.

Including acquisitions and currency effects, billings for the whole of WPP rose 16.6% to £36.9bn or $67.4bn, and reportable revenue was up 20.9% to £7.5bn.

Kantar's like-for-like revenue growth was 3.0%: actual revenue growth was 27.8%, largely due to the TNS acquisition.

Among Kantar's strong performers, the report mentions TNS Worldpanel, Millward Brown companies and Lightspeed in the US, UK and elsewhere, Research International in the UK, France and elsewhere, IMRB in India, Cheskin and Glendinning in the US and a number of Asian units with China, Hong Kong, Thailand and Japan prominent.

Looking at the whole of WPP, the report cites 'three engines of relative growth' - emerging markets, new media, and consumer insight and information. Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, iconically represented by the BRICs and the Next 11 markets (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam), outgrew other regions and now represent almost 27% of the Group's approximately $15bn pro-forma revenue. Internet, PC, mobile, video content and social networks now account for almost 25% of Group revenues. Consumer insight and information, insight and consultancy now account for almost 27% of Group revenues, with TNS included.

The TNS integration is said to be going well, the report stating: 'Our estimates of synergy benefits are being met and in fact being added to. The cost benefits identified will also be realised sooner than originally anticipated and the cost ratios will be in line with our original projections.'

In addition to the acquisition of TNS, the Group continued to make small to medium-sized acquisitions, concentrated in advertising and media investment management: the net initial cost of all acquisitions was £1,049m in cash, of which £736m was for TNS.

Other headline results for the group were generally good: EBITDA rose over 20% to £1.3bn; headline operating margin of 15.0% nearly met its target of 15.3% including TNS; headline profit before tax was up 18.5% to £968m; and profit before tax rose 3.8% to £747m.

Figures for WPP's other three divisions were:

Advertising and Media Investment Management provided 44.4% of total group revenue and 52.1% of its operating profit, with like-for-like revenue growth of 3.6% versus 2007
Public Relations & Public Affairs contributed 10.2% of total revenue, 11.4% of operating profit and 4.9% like-for-like growth.
Branding & Identity, Healthcare & Specialist Communications provided 28.3% of revenue and 23.7% of its operating profit, with like-for-like revenue growth of 0.3%.

North America was the Group's weakest region with almost flat organic revenue growth in 2008. The UK climbed off the bottom of the growth table and performed more strongly than France and Germany, which in turn grew faster than Spain and Italy.

CEO Sir Martin Sorrell said the first quarter of 2009 had so far been weaker, which was likely to result in a 2pc fall in revenues this year. Sorrell has consistently argued that 2009 will be the worst year of the downturn, with a slight recovery envisaged from 2010.

Web site: www.wpp.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.