H&K Up, But Overall WPP PR Revenues Down
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H&K Up, But Overall WPP PR Revenues Down

WPP Group chief executive Martin Sorrell did not pull any punches when he unveiled the company’s preliminary year-end results this week, admitting the 2001 was “a brutal year.”

Paul Holmes

LONDON, February 22—WPP Group chief executive Martin Sorrell did not pull any punches when he unveiled the company’s preliminary year-end results this week, admitting the 2001 was “a brutal year.” He also made it clear that public relations—previously believed to be more resilient than advertising in tough economic times—was part of the problem.
 
While WPP published an acquisitions-driven rise in profits, before goodwill and write-downs, to £490million, compared to £380million the year before, like-for-like revenues actually fell about 3 percent. And public relations revenues declined most dramatically.
 
Revenues from Hill & Knowlton and specialist strategic communications firm Robinson Lerer & Montgomery were up, but revenues from Burson-Marsteller, Cohn & Wolfe and Ogilvy Public Relations was down dramatically. Cohn & Wolfe shuttered its former headquarters office in Atlanta in 2001, while Ogilvy suffered because of its extensive technology PR operations.
 
Margins in the PR business declined also, down to 9 percent from 13 percent in 2000.
 
Sorrell predicted that any recovery would be gradual rather than swift. “What seems most likely is a bath-shaped or saucer-shaped recovery, where the upturn is gradual. This year will be difficult but, hopefully, not as traumatic. We are banking on flat revenues this year with more happening in the second half than the first half.”
 
For the most part, analysts were impressed with WPP’s performance. “Compared with other U.K. media companies, WPP has performed well and maintained its 14 percent margin in the annus horribilis that was 2001,” says Numis Securities’ Lorna Tilbian.
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