Maja Pawinska Sims 30 Apr 2018 // 4:43PM GMT
LONDON — In its first trading statement since former chief executive Sir Martin Sorrell stepped down earlier this month, WPP has reported better-than-expected earnings for its first quarter.
Net sales (which WPP now describes as “like-for-like revenue less pass-through costs”) were down 0.1% across the holding company’s business, against a forecast drop of 1%, despite uncertainty over the future of WPP’s leadership and structure. Reported revenue for the quarter was down 4% at £3.555 billion.
WPP’s public relations and public affairs businesses were among those showing the strongest growth, alongside brand consulting, health & wellness and specialist communications (including direct, digital & interactive). Like-for-like revenue less pass-through costs across the PR and PA business was up 1.5% to £275m for the quarter.
Executive chairman Roberto Quarta said the results were in line with expectations: “WPP has high-quality management teams throughout the business, and they continue to deliver for our clients. Mark Read and Andrew Scott are providing the stability and leadership WPP requires, but there is no standing still. They have my and the Board’s full backing to review the strategy, to come back to us with recommendations, and to move forward decisively to implement our vision for the Group.”
Cohn & Wolfe CEO Donna Imperato, who has been tapped to lead Burson Cohn & Wolfe, said positive first quarters for both Cohn & Wolfe and Burson-Marsteller bode well for the success of the merged agency.
“In our final year as Cohn & Wolfe, I am proud that we are on track again for a fifth consecutive year of double-digit growth. In the first quarter we beat our budget significantly, showing 10% growth.," she said. "The foundation and momentum we’ve built as an integrated communications agency has secured continuing success, which is already helping to drive growth at BCW. Recent and significant wins for our merged entity helped Burson-Marsteller beat budget as well and show growth in the first quarter."
North America, with like-for-like revenue less pass-through costs down 2.4%, was the weakest-performing region. The UK, with like-for-like growth of 5.4%, performed well, with particularly strong growth in the advertising, public relations & public affairs, health & wellness and direct, digital & interactive businesses.
WPP said western continental Europe, with like-for-like revenue down 1.5%, was “challenging”, particularly in Germany. The Netherlands, Italy, Scandinavia, Spain and Turkey were up strongly, with Austria, Belgium, France, Greece, Ireland and Switzerland “difficult”. In Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, net sales were up 2.3%, with strong growth in Asia Pacific, Latin America and Central & Eastern Europe.
In a joint statement, WPP’s joint chief operating officers Mark Read and Andrew Scott said: “In the last two weeks we have focused on spending time with our clients and people, and the response has been very encouraging. As expected, our people are getting on with business as usual, and our clients have expressed their continued support for and confidence in WPP.”
They added: “We intend to build on these strengths by taking a fresh look at our strategy, developing a vision for the Group that recognises the challenges and opportunities presented by the structural shifts in our industry, and executing resolutely against it. Our priority is to focus on growth. We will proactively address the under-performing parts of our business and we need to ensure that our capital is deployed to those areas that will grow fastest and maximise shareholder value.”
Looking ahead, Read and Scott pledged to get “even closer to our clients, and provide faster, more agile, more integrated solutions with data and technology at their heart – making it simpler to access the wealth of talent, creativity and capabilities we have within WPP. Concentrating our efforts on stimulating growth for our clients, and organising the Group to make that possible, is the best way to restore growth for WPP and all its stakeholders.”