Ireland-based advertising titan, WPP Group plc (WPPGY) released its trading update for the first four quarters of 2011,on June 2. The company reported a year-over-year increase of 6.2% in its worldwide revenues for the period.
Revenue growth was attributed to strength across all geographical regions and communication services sector. On a constant currency basis, revenue escalated by approximately 7.8%. Excluding the impact of acquisitions and currency fluctuations, revenue was up 6.2% while gross margin was 6.9% in the reported period.
From a geographical perspective, WPP Group experienced a noticeable growth in the United States where revenues grew by 8% on a constant currency basis. United Kingdom registered a 7% revenue growth; Upward trends in revenue increase were witnessed in Continental Europe, 3%; BRIC countries; 17%; Latin America, 10%; Asia Pacific ,12%; and lastly in Greater China and India where growth soared 19%.
Of the four business segments, revenue from Advertising & Media Investment Management segment increased 12% year over year for the first four quarters of 2011. Branding & Identity, Healthcare and Specialist Communications revenue were up 7% while Public Relations & Public Affairs grew by 5%. Consumer Insight revenue growth was under 3%.
For the first four quarters of 2011, average net debt for the company declined 20.2% and also improved slightly from the debt level of the first quarter 2011. The company repurchased approximately 7.8 million shares (0.6% of issued share capital) for £64 million, or £8.12 per share.
Outlook: For the full fiscal year, management expects revenue growth, excluding the impact of acquisitions and currency fluctuations, to be over 6%. Full year margin is likely to exceed the company’s margin improvement target of 0.5%.
Based in Dublin, Ireland, WPP Group together with its subsidiaries provides advertising and communications services worldwide. The Group faces competition from its peers like Interpublic Group of Companies Inc. (IPG), Omnicom Group Inc. (OMC), and Publicis Groupe SA (PUBGY.PK).
We currently maintain an Outperform recommendation on the company.
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