WPP reduces full-year outlook for 2012
25 October 2012
WPP has slashed its full-year sales growth outlook again as a result of increasing pressure from the Eurozone crisis and the declining health of the North American economy.
The group reported Q3 revenues of $3.95bn, remaining almost flat when compared with the same period last year. The third quarter was slower than the second, particularly in September, owing largely to a slowdown in North America and Continental Europe.
During the third quarter, strong growth was posted in emerging markets, with Asia-Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe accounting for 30.6% of the group’s revenues.
For the same period, 35.4% of the group’s revenues came from North America, 12.5% from the UK and 21.5% from Continental Europe. Germany, France and Turkey posted growth, while Spain, Portugal, Scandinavia, the Netherlands, Switzerland and Austria were tougher, as the effects of the Eurozone crisis took their toll on client spending.
Almost 32% of the group’s revenues came from direct, digital and interactive services.
Net new business in Q3 contributed $1.42bn, marking a slowdown from the same period last year when it accounted for $2.29bn. During the quarter, WPP acquired UK-based digital agency Fortune Cookie, a majority stake in Acceleration, Finnish agency Activeark, Press Index in France and Brazilian digital agency Foster, to name but a few.
Net debt at the group increased by £329m ($428m) to £3.11bn ($4.04bn), compared to £2.78bn ($3.61bn) in 2011. During this period, WPP completed 56 transactions including 25 acquisitions in new markets (of which 18 were in new media) and 21 in consumer insight.
For the first nine months of 2012, reported revenues were up 1.9% over last year at $11.8bn. New business contributed $5.38bn, compared to $4.21bn in the same period last year.
For the first nine months, 35.3% of the group’s revenues came from North America, 29.6% from fast-growing markets, 23% from Continental Europe and 12.1% from the UK.
Looking ahead to the fourth quarter, the group has warned of a further slowdown, reducing its full-year revenue growth forecast to 2.5%. The group put this down to the effects of the Eurozone crisis, political concerns in the Middle East, concerns over “a hard or soft landing in China” and the health of the American economy.
Jenni Baker, London