WPP's annual profits rise 15% after storming fourth quarter
LONDON - WPP's growth continued in the fourth quarter of 2006, taking the group's organic growth for the year to 5.4% and its pre-tax profits up 15.2% to £682m.
Its profits before tax and before finance income and costs increased to more than the expected £750m; they were up 14.5% to £766.3m.
WPP's conservative prediction for organic growth in 2007 is between 4% and 4.5%; this largely excludes new business and forecasts balanced growth in the first and second half of the year.
Revenues for 2006 at the company, leading by chief executive Sir Martin Sorrell, totalled £5.9bn, an increase of 9.9% on 2005, while total billings rose 13% to £30.1bn.
Its net new billings were £3.6bn, compared with £2.8bn in 2005.
Group M, the media planning and buying arm of WPP, generated £2.4bn of those billings. Ogilvy & Mather led the group's four ad agency networks with its new-business score of £187m.
Fourth quarter group organic growth was 7.2%, with even Western Europe, the worst performing territory, picking up in the second half of the year.
But the UK continues to be the laggard for the global powerhouse, registering just 1.8% annual organic growth whereas the Asia Pacific, Latin America, Africa and the Middle East achieved 9.6%.
The company's report expressed surprise at the good health of the US economy, which helped its operations there to organic growth of 4.6%.
It also trumpeted its strength in new media relative to its competitors, claiming its yearly internet-related revenues were almost $1bn (£510m) or more than 9% of its worldwide reported revenue.
"This is more than the 6%-7% for online media's share of total advertising spend both in the United States and worldwide. The new media continue to build their share of client spending," the network claimed.
WPP achieved its target of increasing its operating margin from 14% to a record 14.5%. It grew its average headcount by 9.5% but kept the increase in staff costs to 9%.
It is setting itself an operating margin target of 15% this year rising to 15.5% in 2008 and 16% in 2009.
The company's shares rose 0.65% this morning to 772p.
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