Emerging markets fuel growth for WPP

by Jacquie Bowser, Brand Republic 24-Jun-08, 15:30

LONDON - WPP Group has had a strong start to the year with like-for-like revenues up 4.5% in the first five months of 2008, according to a trading update, which saw strong growth in emerging markets as Western Europe slows.

The like-for-like comparison excludes the impact of currency fluctuations and acquisitions.

WPP said this rise in revenues maintains a consistent organic growth rate of about 5% over the last three and a quarter years.

As reported in WPP's first quarter trading update earlier this year, January and February were strong months, geographically and functionally, but March was slower, mainly in Western continental Europe.

During April and May, the company experienced faster growth in the Asia Pacific, Middle East and Africa, Latin America and Central and Eastern Europe, but again felt slower growth in Western Europe.

In the first quarter Eastern Europe and the Middle East showed growth of 21% and Latin America over 14% while Asia Pacific remained reasonably strong up 8%.

All of communications services sectors showed improvements over the first quarter, with the exception of branding and identity, healthcare and specialist communications (including direct, internet and interactive). Overall this was still WPP's strongest growing sector, with constant currency revenues up almost 16%.

PR and public affairs was up almost 10%, information insight and consultancy up almost 8% and advertising and media investment management up well over 4%. Direct, internet and interactive-related activities now account for over 25% of the group's revenues up from 23% last year.

Philip Lader, WPP's chairman, said: "2008 has seen further continued growth in revenue and profit following the record performance in 2007.

"Looking ahead, you will not need me to remind you that commentators are just about unanimous in their belief that the world economy is in for a bumpy ride. But, perhaps unexpectedly, it is at times like this that we should be particularly appreciative of the unusual nature of this group.

"As a group, we are crucially dependent on no single continent, on no single business sector and on no single communications discipline. In times of change, it's inevitable that the balance of demand for our skills will also change; but the underlying demand will still be there."

WPP said it remained on course to achieve its full-year margin target of 15.5%.