WPP reports profits up 5.5% and predicts a good year
LONDON - WPP Group has posted an upbeat set of financial results for 2007, with pre-tax profits up 5.5% to £719m, as it expands its Middle East operations by taking a controlling stake in Team Y&R there.
The world's second largest marketing services group said the results reflected the continued steady growth of the world economy, despite the credit crunch, and an unprecedented run of new business wins across the group.
The group said like-for-like revenues grew 5% in line with forecasts, while overall revenues rose 5% to £6.19bn.
In terms of new business wins, advertising agencies Ogilvy & Mather Worldwide, JWT, Y&R Advertising, Grey Worldwide and United Red Cell, generated estimated net new billings of £723m.
It was also a good year for the group's media buying point GroupM, which includes media planning and buying agencies MindShare, Mediaedge:cia and MediaCom. GroupM generated estimated net new billings of £3.69bn.
WPP said 2008 is shaping up to top 2007: "We have only preliminary data for January in 2008 and this shows like-for-like revenues up 5%.
"On the basis of these data, 2008 should be a better year than 2007, against the views of most economic forecasters, who predict a gloomy 2008."
WPP's optimistic outlook on 2008, which comes as some predict tough times ahead on the back of the US sub-prime crash, will attract interest -- as the group's advertising outlook is regarded as a bellwether.
The group said that 2008 is set to benefit from emerging markets in Asia-Pacific, Africa, Latin America, the Middle East and Russia. In addition to marketing spend around the US Presidential elections, the Beijing Olympics and the European Football Championships.
Looking beyond 2008, WPP said a slowdown, not a recession, in the US will be hard to avoid, as a new US President tries to deal with heavy government spending and twin deficits.
However, 2010 has been earmarked as a good year, with the FIFA World Cup in South Africa, the Winter Olympics in Vancouver and the mid-term Congressional elections in the US stimulating economic activity.
Earlier this week Sir Martin Sorrell, chief executive of WPP, said he expected to see a dip in China after 2008 as glow of the Olympics fades, and that the incoming US President will have to make some tough economic decisions at the start of a possible eight-year stint in office.
WPP also announced this morning that it had acquired a majority stake in Team Y&R Holdings, which is the holding company for a group of companies in which WPP has held a minority stake since 1999.
Team Y&R operates in the Middle East and North Africa and owns Team Y&R, Polaris, Asda'a and Intermarkets as well as local shops branded under the Mediaedge:cia and Wunderman banner.
Specifically Team Group has significant operations in the United Arab Emirates, Saudi Arabia,
Lebanon, Kuwait, Morocco, Jordan, Qatar and Oman and employs more than 1,200 people with major clients including Emaar, Etisalat, Ford, Microsoft, Sony Ericsson and Visa.
In the year to December 2007, the group had unaudited consolidated revenues for the year of $100m with gross assets at the same date of $242m.
Earlier this month, WPP purchased a stake in NuConomy, a web analytics company based in Silicon Valley and Israel.
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