Sorrell to reveal upbeat results for WPP

by Staff, Brand Republic 25-Feb-08, 09:00

LONDON - Sir Martin Sorrell, WPP Group chief executive, will confirm on Friday that 2008 is set to be a good year for the advertising industry, with an upbeat set of results beating financial forecasts.

WPP is expected to report better than expected results for 2007 and report that the coming year looks healthier than the last, with the US and UK not thought to be showing signs of a slowdown.

According to reports, WPP will exceed analyst's expectations for its revenues, earnings and margins in 2007.

Analyst are predicting that WPP will report pre-tax profits up by around 10% to £813m, from £766m in 2006, on revenues of about £6.1bn. They are also forecasting organic growth of around 5% and expecting the company to hit its 15% operating margin target for 2007.

Despite predictions of a slow start to 2008 Sorrell is also expected to say that the first two months of 2008 have been strong for WPP, which has been buoyed by a strong performance in Asia. Last month, the company bought a major Asian digital agency, Agenda Group, labelled by Sorrell as a "jewel much coveted by our competitors".

WPP, which owns JWT, Ogilvy & Mather and Young & Rubicam, will benefit from the quadrennial affect of the US presidential elections, the Beijing Olympics and the European Football Championships.

WPP agencies have also put in strong performances, picking up a number of major global wins including US telecoms giant AT&T's $3.4bn (£1.7bn) media account, won by Mediaedge:cia; MediaCom picked up Dell's £850m media account; and MindShare won LG Electronics' $350m media account.

As well as growth in Asia, WPP is to focus on the Middle East, which is seen as another fast growing market. Earlier this month, WPP purchased a stake in NuConomy, a web analytics company based in Silicon Valley and Israel.

Despite the promising outlook for 2008, Sorrell will warn that 2009 will be much tougher. The results will follow an interview Sorrell gave last month in which he spoke of the gathering gloom less than a year away.

Sorrell said: "We see 2008 as still being a pretty good year, in fact better than 2007... we think the issue is more about 2009, there is a political cycle kicking in now and in 2009."

After 2008, Sorrell said that he expected to see a dip in China as the glow of the Olympics fade and an incoming US President will have to make some tough economic decisions at the start of a possible eight-year stint in office.

He said: "The new President in the United States will have eight years and will do anything unpleasant in that first year of that cycle and we think there might be a slowdown in China after the Beijing Olympics."