Revenues slide at WPP

05 March 2010

Sir Martin Sorrell’s WPP group has reported an 8.1% drop in like-for-like revenues to $13bn for the year ending 2009 as it continues to feel the effects of the global recession.

Despite signs of recovery in the latter half of 2009 the holding company, of agencies such as Mindshare and Mediaedge:cia, was unable to recover from a severe first half of the year, reporting a pre-tax profit of $1bn, down 11% from $1.1bn.  

“We seem to have moved from staring into the abyss post the Lehman Brothers crisis, to a ‘less worse’ phase in the second half of 2009 and a stabilisation phase towards the end of 2009 and the beginning of 2010,” said WPP in its trading statement.  

The impact of the recession was felt across the globe, with North America and Western Continental Europe reporting the sharpest declines in revenue of 8.1% and 10.2%, respectively. The combined revenues of Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe fell 6.8%.

Like-for-like revenue was down across all WPP business sectors: advertising fell 8.5%, consumer insights dropped 9.5%, PR slumped 7.4% and branding & identity, healthcare & specialist communications saw a 6.2% decline.

According to WPP, its advertising and media investment management businesses came under pressure last year from clients seeking “greater and greater effectiveness and efficiencies, in markets where there is little inflation and, as a result, little pricing power.”

The company slashed its headcount by 7% from 112,930 to 105,318 in 2009, following a 6.7% cut in 2008.

For 2010, the group is expecting stability to return thanks to events such as the Winter Olympic Games in Vancouver, the Asian Games in Guangzhou, the FIFA World Cup in South Africa, the World Expo in Shanghai and the US mid-term elections.

Flat like-for-like revenue growth is expected in 2010, signified by a mildly weaker first half and stronger second-half.

WPP’s results are in line with its rivals. Earlier this week Interpublic Group (IPG) reported a 5.3% year-on-year drop in revenue. Net income at IPG fell from $209.8 million during 2008 to $129.4 million in 2009.

Last month Publicis Groupe revealed a 7.6% fall in revenue for 2009.

Martina Lacey, London