WPP hit by 8.7% organic revenue drop but shares rise
LONDON - WPP Group, owner of Ogilvy Advertising and Mediaedge:cia, has suffered an organic revenue fall of 8.7% but has declared that "less worse" economic conditions mean there has been "no Armageddon" for the industry.
Like-for-like gross margin, which WPP said was a better measure of competitive performance, fell by 8.3% -- a smaller decline than in previous quarters.
Overall revenues, taking into account acquisitions and currency fluctuations, rose by 16.7% to £2bn.
Shares in WPP rose significantly when the market opened this morning, up by 24 pence to 569 pence, a rise of 4.4%.
WPP, headed by Sir Martin Sorrell, was once famous for issuing financial statements comparing economic growth to baths and saucers, but Hollywood films were the flavour of the day today.
In a trading statement, the company said: "There is little doubt that consumer and corporate confidence has recovered somewhat from the panic levels of the fourth quarter of 2008 and first quarter of 2009.
"Confidence, however, remains fragile amongst consumers, because of the shadow of high unemployment levels and amongst corporates, because Armageddon and Apocalypse now were barely avoided in September 2008."
WPP said that UK revenues for the third quarter had fallen again when compared to the second quarter, reflecting the fact that while France, Germany and the US are now officially out of recession, this country has not yet returned to economic growth.
In the US, the fall in revenues stood at 6.1%, compared with 9.4% in the first quarter. Other areas to see improvement were Western Europe and Asia Pacific.
WPP won new business worth £730 million in the third quarter, including the £80 million Lloyds banking media account picked up by Mediaedge:cia.
Read Bob Willott on the Bottom Line for more detailed analysis on WPP's trading statement.
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