WPP is definitely out of the bath as profits leap 18%
LONDON - Sir Martin Sorrell has said that WPP Group is definitely out of the bath, as the company posted a healthy pre-tax profit rise of 18% to £473.4m for 2003 and says that the prospects for the year ahead appear very favourable.
The company, owner of advertising agencies J Walter Thompson and Ogilvy & Mather as well as the media agency MindShare, saw revenues rise by over 5% to £4.1bn and the operating margin rise from 12.3% to 13%.
Advertising and media were credited with pulling the group out of the recession, with like-for-like revenue growth excluding the impact of the acquisition of Cordiant of 3%. In contrast, public relations and public affairs continued to be affected by the recession although the group said that the performance in 2003 was "less worse" with revenue down by 0.6%.
It was a remarkably upbeat set of results from WPP with the company saying: "This year's prospects ... look good with worldwide advertising and marketing services spending set to rise by at least 3% to 4%. Even Japan and Europe are showing some signs of life."
However, the company retains its conservative outlook and, looking to 2005, which will not have the benefit of a US Presidential elections and the Olympic Games, WPP is predicting a less buoyant picture.
Referring to his famous prediction that the advertising recovery would resemble a bath-shaped graph, Sir Martin said: "We are definitely out of the bath -- one potential worry being what a re-elected or newly elected President might have to do about a fiscally driven large government deficit, a weak US dollar and rising inflation after the first Tuesday in November.
"US government spending is already rising at levels not seen since the Vietnam War in 1967. We would not want to take a shower in 2005."
Shares in the company leapt by more than 6p this morning after WPP released the news, trading at 637p, a rise of 1%.
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