WPP's public relations profits drop as Europe struggles
Headline profits in WPP's public relations and public affairs sector dropped 4.5% in 2012, according to its annual financial results released today.
Headline profits before interest and taxes were £136.4m, down from £142.9m in 2011.
This was despite a 3.6% increase in revenues to £917.1m for the sector, which includes Burson-Marsteller, Cohn & Wolfe, Hill+Knowlton Strategies, Ogilvy Public Relations, Penn Schoen & Berland and RLM Finsbury.
Like-for-like revenues were down 1% and WPP explained the performance was a result of ‘continuing pressure in North America and Continental Europe across most of the group’s brands, only partly offset by strong growth in the United Kingdom, Latin America and the Middle East & Africa’.
The company also revealed that January’s like-for-like PR revenues were down, by an unspecified amount.
In 2012 public relations was the second worst performer among WPP’s four sectors in terms of profit growth, with customer insight the laggard.
Advertising and media investment management shot up 13% to £754.5m and branding & identity, healthcare and specialist communications climbed 9.4% to £393.2m.
Overall, WPP posted pre-tax profits of £1.1bn (up 8.3%) on revenues of £10.4bn (up 3.5%).
Sir Martin Sorrell, the chief executive of the group, said: ‘2012, the group’s twenty seventh year, was like the previous year, a record year, but it felt very different. We reached our targets, but we got there ugly.
‘As the like-for-like revenue growth rate started to slow in quarter two to 3% and, in turn, to 2% in quarter three, we did not start to make the cost adjustments quickly enough to counter the increased staff investment until quarters three and four, although we are now much better balanced for 2013, with the like-for-like number of people in the business slightly down at the end of the year compared with the beginning of 2012.’
He continued to gripe about David Cameron’s pledge to hold a referendum for Britain’s European Union membership, saying: ‘Whilst no doubt being an astute political move, [it] adds further uncertainty to the United Kingdom economy until after the next United Kingdom general election in 2015.’
He added: ‘2013 looks to be another demanding year.’
This article was first published on prweek.com