WPP cuts forecasts but 2012 prospects 'not dire'

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The Independent Online

WPP yesterday cut its growth forecasts for the full year as pressure in the US and at its market research business caused revenues to slow in the three months to the end of September.

Third-quarter sales rose 4.7 per cent year on year, slowing from 5.6 per cent in the second quarter. Yet operating margins improved, which "augurs well for enhanced profitability, despite more difficult economic headwinds and industry comparatives," the group said.

Sir Martin Sorrell, WPP's chief executive, said that despite current uncertainties, the prospects for 2012 "do not look dire". He hopes spending on advertising will be "buttressed" by the London Olympics, the European Football Championships and the US presidential election, which should add another 1 per cent to spending levels.

Sir Martin said WPP had so far been little affected by the "six global risks" squeezing client spending. These were possible eurozone contagion, the US deficit, rising commodity prices, the Japanese earthquake, uncertainties relating to the Arab Spring, and the withdrawal of government stimulus after Lehman Brothers' collapse.

But he added that the "economic gloom and despair in the media and elsewhere must have some impact on corporate and consumer confidence".