WPP growth rate highest for three years

WPP has seen the highest quarterly growth rate in more than three years, as world economic recovery, the US presidential elections and the Olympic games all boosted advertising expenditure.

WPP has seen the highest quarterly growth rate in more than three years, as world economic recovery, the US presidential elections and the Olympic games all boosted advertising expenditure.

Like-for-like revenues at the advertising giant grew 5.7 per cent for the period, well ahead of City forecasts and the biggest increase since the first quarter of 2001. The third-quarter figure for this year compared with 1.8 per cent seen for the first quarter and 3 per cent for the second, showing a clear trend of accelerating growth this year.

"In these low inflationary times, that's pretty good," Sir Martin Sorrell, the chief executive, said. On a constant currency basis, absolute revenues were up 12 per cent to £1.1bn for the third quarter. All regions, with the exception of Continental Europe, showed double digit revenue growth.

The 11 per cent rise in North American revenues marked the eighth consecutive quarter of growth. The United Kingdom and western Continental Europe, which have been difficult markets, rebounded, with revenues up more than 12 per in the UK and Continental Europe up almost 8 per cent.

Asia Pacific, Latin America, Africa and the Middle East, have shown consistent growth in each quarter of 2004, WPP said. For the first nine months of 2004 revenue across these regions rose more than 26 per cent.

New business billings of £234m were won during the third quarter, making a total of £1.8bn for the first nine months. New business included accounts from HSBC and Microsoft.

In the first month of the fourth quarter, new business wins "have started extremely strongly". Incremental billings of more than $1.5bn have already been secured, including business from Nestlé, Paramount and Toys R Us. Decisions are awaited on a further $3bn of new business - these are massive advertising accounts that are about to be awarded by Unilever and Samsung.

Lorna Tilbian, an analyst at Numis Securities, said: "We believe such wins reflect WPP's scale and global reach as clients continue to consolidate their media accounts."

However, Sir Martin warned that growth would slow in 2005, as the one-off factors that helped this year disappear and the global economy has to grapple with problems such as the high oil price, weak dollar and the US fiscal deficit.

"The jury remains out on 2005," he said, though he added: "Any slowdown in the United States may be tempered by continued growth in Asia Pacific, after a Chinese soft-landing and continued recovery in western Europe and Latin America."

He said that if global ad expenditure were to grow by 3 to 4 per cent this year, next year will probably see a 2 to 3 per cent expansion. Analysts at Numis Securities said that despite the forecast slowdown next year, WPP ought to outperform the industry to deliver 4 per cent like-for-like growth in 2005.

Sir Martin said he was "keeping a watchful eye" on the situation at Havas, the French advertising group which many believe is likely to be sold. Analysts said that WPP is seeking to expand further in France.