Strong sales set WPP on acquisition trail

WPP, the advertising and communications group run by Martin Sorrell, yesterday reported a strong first three months' trading and said it remains committed to seeking more acquisitions in emerging markets.

The growth plan came despite falling profits in Asia Pacific and Latin America in the first three months of the year. The company said that while Asian markets are stabilising, Latin America is more difficult, with Brazil a particular problem.

WPP's first-quarter revenues rose by 10 per cent, with new billings up by the same amount to pounds 447m. The US and continental Europe were the strongest regions.

Public relations and information consultancy were the best performers with revenues up by 24 per cent and 19 per cent respectively.

The group, which owns the Ogilvy & Mather and J Walter Thomson advertising agencies, is also on track to improve margins from 12.8 per cent to 13.4 per cent.

WPP shares rose another 6.5p to 566.5p on the news, just below their 12-month peak. They stood at little more than 200p late last year.

The shares' good run has been boosted by a return to popularity in cyclical plays underpinned by the receding fears of recession.

Improving consumer confidence is clearly good for advertising billings and although the shares succumbed to a bout of profit taking on the full- year results in February, the economic picture has improved considerably in the last two months.

As one analyst put it: "The good thing about WPP is that you get the best of both worlds. You get a cyclical play as consumer economies improve. But you also get a growth stock as it expands its interest in growth sectors like specialist communications and Internet advertising."

WPP makes much of its position as a global player winning international accounts from major clients such as IBM and Ford. It is also keen on keeping costs low, with an increasing emphasis on incentive payments for staff rather than fixed salaries.

House broker WestLBPanmure is forecasting full-year profits of pounds 240m.

That puts the shares on a forward multiple of 28. That is about in line with the FTSE 100 but after such a strong run it is hard to see the shares making much more headway from here.

WestLB Panmure regards the stock as a solid hold with earnings growth forecast at 10 per cent.

But there is also a strong argument for locking in profits.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...