WPP shares trade close to record highs after strong January sales

<p>WPP REPORTS 4.6% BOOST TO REPORTED REVENUES AND PROFITS BEFORE TAX OF £1.51BN WPP, the UK advertising giant, met forecasts with a 4.6% boost in […]</p>


WPP, the UK advertising giant, met forecasts with a 4.6% boost in revenues to £11.53bn and net sales growth of 3.3% on a like-for-like basis. These results came against a backdrop of a 7% currency headwind thanks to the strong pound sterling and this headwind was unchanged from previous guidance.

Profits before tax grew 12% to £1.45bn on a constant currency basis and reported billings hit £46.19bn, which marked a growth of 6.8%. Estimated net new business billings – sales it won throughout the year – stood at £5.83bn. This means WPP remained in first place for net new business tables for a third year in a row.

The strongest revenue growth area for the group came in the UK, where it enjoyed a 12.9% like-for-like growth compared to 9.5% in North America and 3.8% in Western Continental Europe, which is perhaps yet another sign of continued business confidence in the UK’s economy.


Giving another boost to shareholder confidence was the fact that the firm enjoyed a stronger than expected start to January business sales. Like-for-like revenue grew by 6.7% in the month with net sales (like-for-like) growing by 3.9%, which was a pace of growth not only above 2014 as a whole but also exceeding the final quarter of the year.

Of course it remains to be seen yet whether this first month is a sign of things to come and we must take this strong start with a pinch of salt. Nevertheless, there will be investors out there who may be backing the firm to maintain a higher rate of revenue growth for the first quarter of the year if they can maintain their January revenue run-rate. A stronger than expected first quarter could raise hopes of a profit upgrade but it’s still very much early days yet.
The firm has confirmed it will continue to target a 3% rate of growth in both revenue and net sales growth (both on a like-for-like basis).


The advertising industry remains in a consolidation phase, where acquisitions and mergers are likely to continue as firms focus on cost-saving initiatives and new media technology. WPP remains confident of not only retaining existing business but also winning new business as a result of industry consolidation. The group completed 65 transactions in 2014 and there is every expectation that M&A activity will continue into the next year for strategic digital partnerships, new technology and as a way for the firm to enter new markets. Last year the firm made 36 acquisitions specifically to enter new markets and territories.

WPP chart

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