WPP said like-for-like net sales-a revenue measure which strips out costs linked to acquiring digital media space and currency swings, acquisitions and disposals-rose 3.3% in the third quarter. All investments can fall as well as rise in value so you could get back less than you invest.
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WPP has announced solid third quarter results and maintained its full year sales and margin guidance. Its operating profit margin – income divided by revenues – rose to 0.5 per cent on a constant currency basis, above the long-term target of 0.3 per cent for the full year.
Nine months reported revenue was up 6.5 per cent at £8.766 billion (approximately $13.4 billion).
As a result, there has been a “tsunami” of companies leading reviews of their advertising investment, concentrated largely in the United States, the agency said as it unveiled its third quarter results.
Expanding its reach into new markets, WPP has executed 38 acquisitions so far this financial year.
Management’s decision to increase its dividend pay-out ratio to 50% by 2017 is being justified by the group’s strong cash flow generation.
Over the last twenty years WPP has grown the dividend at a double-digit compound annual growth rate. French rival Publicis Groupe SA said last week that it had no growth last month as clients canceled and postponed campaigns.
Asked about his own future, the 70-year-old said he was happy to carry on as chief executive adding: ‘They haven’t carted me off to the glue factory yet’.
As long as the global economy behaves itself, WPP should be capable of strong growth, although the shares are likely to remain volatile while concerns over China persist. Similarly western continental Europe performed well with revenue growth up 6.1% to £552m. This was at 2.6 percent for the first nine months.
Sales at the United Kingdom business grew by 1.1 per cent – significantly slower than the 4 per cent growth seen in the previous quarter.
The bank reduced the benchmark rate by 0.25 percentage points to 4.35%, its sixth cut in a year.
“Flexible staff costs (including incentives, freelance and consultants) remain close to historical highs of around seven per cent of revenue and net sales and continue to position the group extremely well should current market conditions deteriorate”.
Net sales margin improvement of 0.3 margin points excluding the impact of currency.
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The world’s largest marketing services group, which reported a slowdown in the second quarter, saw global business pick up in the third quarter with like-for-like net sales rising to 3.3% in the third quarter.
