WPP has reported revenue growth of 1.5 per cent, with like-for-like growth of 7.0 per cent, 2.6 per cent growth from acquisitions and -8.1 per cent from currency, fully reflecting the continuing strength of the Sterling against many currencies, particularly in the faster growth markets, as in the final quarter of 2013. Q1 of 2014 showed a similar pattern to the final quarter of 2013, with particularly strong like-for-like growth in North America and the UK and advertising and media investment management and sub-sector direct, digital and interactive.
Brazil, Russia, India and China accounted for over $530 million revenue in the first quarter.
WPP has reported like-for-like revenue growth in all regions and business sectors, characterised by particularly strong growth geographically in North America, the UK and Asia Pacific, Latin America, Africa & the Middle East and Central and Eastern Europe, although the latter region less so and functionally in advertising and media investment management and sub-sector direct, digital and interactive.
Like-for-like gross margin or net sales growth of 3.8 per cent has been reported, with the gap compared to revenue growth widening, as mentioned in the 2013 Preliminary Announcement, as the scale of digital media purchases in the Group’s media investment management and data investment management sectors increased.
Constant currency average net debt in the first quarter decreased by £602 million (20 per cent) to £2.454 billion compared to the same period in 2013, continuing to reflect the improvement in working capital seen in the second half of 2013 and also the benefit of converting the £450 million Convertible Bond in mid-2013.
Net new business of $1.275 billion was reported in the first quarter, as compared to $1.504 billion in the first quarter last year. A recent surge of new business activity and net new business wins reflect significant reviews of client relationships in light of past and potential changes in the structure of the advertising and marketing services industry, although client finance and procurement functions continue to place heavy emphasis on pricing. Competitive responses, particularly by incumbents, are sometimes uneconomic and inadvisable.
In constant currencies, advertising and media investment management, gross margin or net sales grew by 7.0 per cent with like-for-like growth of 5.7 per cent, the strongest performing sector. Of the Group’s advertising networks, JWT, Y&R and Grey in particular, had a strong start to the year, especially in the US, with Ogilvy & Mather also performing well. Growth in the Group’s media investment management businesses was consistently strong throughout 2013 and this has continued into the first quarter of 2014, with constant currency gross margin or net sales up almost 10 per cent for the first quarter and like-for-like growth up over 10 per cent.
The Group gained a total of £797 million ($1.275 billion) in net new business wins (including all losses) in the first quarter, compared to £940 million ($1.504 billion) in the same period last year. Of this, JWT, Ogilvy & Mather, Y&R, Grey and United generated net new business billings of £224 million ($359 million). Also, of the Group total, GroupM, the Group’s media investment management company, which includes Mindshare, MEC, MediaCom, Maxus, GroupM Search and Xaxis, together with tenth avenue, generated net new business billings of £366 million ($586 million).
April has proven to be a particularly strong month, so far, with trade press reported net new business billings of over £0.9 billion ($1.5 billion).