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WPP Q1 Revenues Drop Almost 6%
UK marcoms giant WPP has reported a 5.8% fall in Q1 revenues, excluding the impact of acquisitions and currency fluctuations. The firm says this reflects a cut in client spending in reaction to the global financial and economic crisis.
 In the first quarter Kantar, the group's information, insight and consultancy arm, saw a 101.5% growth on a constant currency basis from £227m to £ 552m, driven by the acquisition of TNS. The buy was completed in October last year and cost £1.6bn - funded principally by debt.
Advertising and media was the WPP sector least affected by the dip, with PR and market research slightly more affected. Branding and identity, healthcare and specialist communications (including direct, Internet and interactive) suffered most.
While the final quarter of 2008 was better than expected, the firm says the first three months of 2009 were 'markedly different', although the rate of decline eased in March.
On a constant currency basis but with acquisitions included the group's revenue grew by 11.1%. Economic pressure was most keenly felt in the US, with the UK less affected and Asia Pacific, Latin America, Africa and the Middle East least affected.
Operating margins were down against last year, partly due to severance costs as headcount was reduced in line with the fall in revenues. As of March 31, WPP had 109,408 staff, a reduction of 2,280 or 2% since March 2008.
This morning, CEO Sir Martin Sorrell admitted to BBC Radio 4's Today programme that the fall in Q1 was faster than expected and that the company had under-forecast what was going to happen.
'The first half of 2009 will clearly be very difficult, with the second half, although continuing to be tough, likely to improve relatively. Any recovery, of sorts, will probably come in 2010,' added Sorrell.
A month ago, Sorrell told news service dealReporter that WPP would cut a percentage of its 112,000 global headcount for every percentage fall in revenue, stating: 'If revenues are down 2% we will make a cut in 2% of the workforce. If they are down 3% or 4% we will reduce headcount by 3% or 4%.'
Web site: www.wpp.com .
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