WPP announces 5 percent like-for-like revenue growth

 Press Release

WPP announced a 7.4 percent increase in revenues in Q3 21013. The highlights of the performance are as follows:

1. Third quarter reported revenues up 7.4% at 2.680 billion

2. Third quarter like-for-like revenue growth accelerates to 5.0%

3. Nine months reported revenues up 7.2% at 8.007 billion

4. Nine months like-for-like revenues up 3.3%, ahead of consensus

5. Nine months operating margin up 0.5 margin points and targeted to be up same for full year

6. Constant currency net debt at 30 September 2013 down by 766 million on same date in 2012

7. Net new business of 4.935 billion in first nine months giving leadership in all new business league tables

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Quarter 3 and first nine months highlights

1. Revenue growth of 7.4%, with like-for-like growth of 5.0%, 1.4% from acquisitions and 1.0% from currency. Q3 significant acceleration over Q2 and first half, partly the result of easier comparatives with a strange September for the industry as a whole last year (which seems to have been forgotten), but also due to particularly strong growth in July and September and in North America, the UK and Latin America and functionally in advertising and media investment management, data investment management and healthcare communications

2. Constant currency and strong like-for-like growth achieved in all regions and business sectors, except public relations and public affairs, maintaining strong growth geographically in the UK, Asia Pacific, Latin America and Africa and functionally in advertising and media investment management and branding and identity, healthcare and specialist communications (including direct, digital and interactive), with significant improvement in data investment management in the quarter

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3. Operating profits and operating margins in the first nine months in line with target (including operating margin improvement of 0.5 margin points) and budget and ahead of last year

4. Average net debt for the first nine months decreased by 61m (2%) to 3.080 billion compared to last year, at 2013 constant rates, continuing to reflect an improvement in working capital and also the benefit of converting 416 million of the 450 million Convertible Bond, offsetting heavier acquisition spending last year

5. Net new business of $3.716 billion in the third quarter, compared to $1.415 billion in the third quarter last year and $7.896 billion in the first nine months, compared to $5.375 billion in the same period last year, again ranking first in all net new business tables

Current trading and outlook

1. FY 2013 quarter 3 preliminary revised forecast | Quarter 3 preliminary revised forecast, which has not been reviewed as yet, shows full year like-for-like growth of over 3%, similar to the quarter 2 revised forecast. Like-for-like growth in all regions and business sectors, including public relations and public affairs in quarter 4, with improving trend in the USA and the faster growing markets of Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, offset by some slower growth rates in the UK and Western Continental Europe. Headline operating margin target remains 15.3%, up 0.5 margin points from last year

2. Continuing dual focus in 2013 | 1. Increased emphasis on balancing revenue growth with headcount and staff cost increases to achieve target operating margin in 2013; 2. Ensuring headcount and staff costs run rates are in line with anticipated revenue growth for 2014

3. Long-term targets reaffirmed | Above industry revenue growth due to geographically superior positions in new markets and functional positions in new media and data investment management, including data analytics and the application of new technology; improvement in staff cost/revenue ratio of 0.3-0.6 points p.a. depending on revenue and gross margin growth; operating margin expansion of 0.5 margin points or more; and PBIT growth of 10%-15% p.a. from margin expansion and from increased emphasis on strategically targeted small and medium-sized acquisitions to achieve the recently raised fast growth market and new media sector targets as a percentage of total revenues to 40-45%