Insights Revenue Down Nearly 10% in WPP's 'Brutal Year'

Marcoms giant WPP saw revenues in its insights division fall 9.5% on a like-for-like basis during 2009, whilst on the same basis gross margin fell by 7.7%.

The reported increase of 63% in overall consumer insight revenues reflects the acquisition of TNS the previous year. During the year, consumer insight revenue climbed to £2.3bn from £1.3bn in 2008, and the division now accounts for more than 26% of group revenues.

Overall reported margins in the division fell by 2.6 margin points to 8.5%, which WPP says reflected planned integration costs in relation to the merger of Kantar and TNS and the impact of the recession.

Consumer insight - which includes Kantar, TNS-RI, Lightspeed Research and Added Value - saw sequential quarterly improvement in the second half of the year, with a marked improvement in the final quarter as clients 'appeared to return to more stable spending patterns'.

Headline profit before tax (PBIT) was £196.9m, or 8.6% of revenue, compared with a 2008 margin of 11.3%.

During the year, WPP introduced a number of cost saving initiatives, including group headcount reduction of around 7%, in response to declining revenues and its £1.1bn debt-financed acquisition of TNS. In addition to cutting its workforce, WPP also reduced the amount of discretionary bonus payments it made to staff.

For the full year, group revenue rose 16% to £8.7bn; up 4.9% on a constant currency basis. In a statement, the firm said that while 2009 had been a 'brutal year' overall, the group had adjusted its cost base after a difficult six months, and had achieved the same pro-forma operating margins in the second half of the year as it had in the same period of 2008.

'2010 should be a more stable year - our budgets for 2010 indicate flat like-for-like revenue growth, with a mildly weaker first half and stronger second-half,' said CEO Sir Martin Sorrell in a statement. 'The company believes it has the correct strategic priorities - new markets, new media and consumer insight.'

Shares in WPP fell 1.5% or 9.5p to 614.5p in early trading.

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.

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