WPP's world revenues take 12% leap

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The Independent Online
WPP, THE global advertising and marketing services group, yesterday reported a strong upturn in trading for the first five months of 1999, boosted by account gains in its traditional advertising agency businesses and strong revenue growth in public relations and specialist communications.

Worldwide revenues jumped 11 per cent on a constant currency basis with sterling's weaker profile on foreign exchange markets pushing up reportable revenues by over 12 per cent. WPP businesses in North America led the way with 14 per cent sales growth, though Britain ran a close second with a 13 per cent gain.

WPP owns ad agencies J Walter Thompson, Ogilvy & Mather and public relations consultancy Hill and Knowlton.

"The growth rate has been quite strong in the first five months," said Martin Sorrell, chief executive. The second-half, he said, is likely to remain strong, buoyed by an early advertising spree as candidates jockey for position in the 2000 US presidential election campaign, as well as the positive impact of the millennium and the Sydney Olympics.

Mr Sorrell said that WPP's Internet revenues, already among the biggest of any advertising group, are likely to grow to about $100m in 1999 from $60m last year. "What's really driving the interactive side is the construction of transaction sites, not advertising," he said.

A rebound from near financial collapse a decade ago has seen WPP operating profit margins recover to approach the best levels in the advertising industry. Further margin growth is still possible, although Mr Sorrell said that will require changes in the company's business model.

"There is an opportunity for us to improve our business model, reducing the layers in decision-making processes and improving the business process," he said. Mr Sorrell said WPP's pounds 200m surplus annual cash flow would be split roughly equally between acquisitions, share buy-backs and capital expenditure to enhance information technology resources.

WPP stock closed up 13p at 550p.