WPP boosts sales despite cautious clients

WPP has reported 8 per cent revenue growth and profits "well above target" in the first quarter of the year - an indication that the world's largest advertising group by sales is outpacing its rivals Publicis and Omnicom.

On Thursday, the FTSE 100 company led by Sir Martin Sorrell, which owns agencies including Ogilvy & Mather and JWT, said its revenues rose to to £2.78bn in the first three months of the year, an improvement of 8.3 per cent on the same period a year earlier. On a like-for-like basis, group revenues were up 5.2 per cent.

Revenue growth was achieved in all regions and businesses except its data investment management division.

However, WPP also warned that clients were still seeking to cut costs and were unwilling to splash out large amounts of money on marketing.

It said its clients were "certainly more confident than they were in September 2008 post-Lehman", but remained "unwilling to take further risks" because of factors ranging from growing geopolitical tensions to the rise of "short-term focused activist investors".

Net sales - a measure that WPP described as the most "meaningful and accurate" reflection of its top line growth - rose 5 per cent on a constant currency basis, and 2.5 per cent on a like-for-like basis.

WPP's rivals do not report net sales figures. In their own quarterly trading updates this week, Publicis and Omnicom, which last year aborted a planned $35bn merger, reported organic revenue growth of 0.9 per cent and 5.1 per cent, respectively.

While WPP described its top line growth as "reasonably above budget", it said that bottom line growth and operating margin improvement has been "well beyond budget, target and last year". The company has been targeting a 0.3 margin point improvement in its net sales margin this year.

The company said it saw new business of almost exactly $1bn in the first quarter, compared to $1.28bn in the first quarter last year.

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