WPP expects 'very tough' 2009 but not Armageddon
LONDON - Sir Martin Sorrell's WPP Group is predicting a "very tough" 2009, but not the Armageddon being predicted by share prices, after revealing its third quarter revenues rose by 16.2% to £1.72bn.
The weaker value of the pound against other currencies was decisive for revenue growth, which was just 6% if currency fluctuations over the year are ignored and just 3% if acquisitions are also ignored.
Having imposed a hiring freeze this month, WPP said revenue forecasts submitted by its operating companies for the fourth quarter "appear cautious".
It expects 2009 will be "very tough" due to the negative effect of the financial turbulence on consumer and corporate confidence, and marked by significant variation in growth by region.
But it attempted to dispel the pessimism evident in the stockmarket's view of its future, saying growth could well be helped by the Keynesian policy efforts being made to stimulate economic activity.
WPP said: "Whatever the pattern, it is not likely that our budget will reflect the Armageddon currently predicted by the fall in stock prices."
Early trading in WPP shares did not evidence much agreement, with the market sending the share price down 2.2% to 325.25p. Within the past month its lowest close has been 310.25p -- a level it was last at in 1998 -- and its highest 464.5p.
The group's results were characterised by a wide varying levels in growth across different geographic markets in contrast to fairly well balanced growth across business sectors.
The UK was the worst performing region with 2.9% growth in sterling terms to £224m. Though US revenues did not grow at all in dollars, it grew 7.1% in sterling to £596.9m.
Continental Europe grew 25.5% to £459.4m and Asia Pacific, Latin America, Africa & Middle East grew 29.4% to £439m.
The best performing business sector was advertising and media investment management, up 18.4% to £785.3m, while the worst was information, insight and consultancy, up 12.9% to £246.7m.
WPP's acquisition of market research company TNS has progressed further with its offer being declared unconditional. It has received acceptances for 95.5% of TNS shares.
It expects TNS will be delisted from the stock market on November 26.
It said TNS would retain its identity while becoming part of its insight division Kantar.
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