WPP posts 40 per cent net profit rise

Sir Martin Sorrell's WPP delivered a net profit increase of more than 40 per cent last year on the back of huge billings growth and an improving global economic climate.

And the group is predicting an equally strong performance in 2005, with revenue growth of 3 per cent to 4 per cent as a result of business coming out of the world's emerging economies, where WPP has a strong presence.

"We feel very comfortable looking into 2005," Paul Richardson, the WPP finance director, said. WPP's communications empire includes JWT, Ogilvy & Mather, Young & Rubicam and, most recently, Grey Global Group.

His comments followed the company's announcement that its pre-tax profits had risen to £546 million from £473.4 million in 2003. Revenue rose by 5 per cent to £4.3 billion, while margins increased from 13 per cent to 14.1 per cent.

Analysts say WPP is poised to benefit from its market-leading position in the rapidly emerging markets of Brazil, India, China and Russia. WPP is concluding a deal in Russia that will make it the largest group of its kind in the region.

At the same time, the company is dominating the burgeoning area of interactive and web-based services with businesses such as OgilvyInteractive, Wunderman and digital@JWT.

Success in these areas has coincided with a strong new-business performance, with $6.8 billion-worth of new business from clients including HSBC, Microsoft, Nestle and Paramount.

WPP's growth forecasts are significantly below those of ZenithOptimedia and Carat, which estimate about 5 per cent, and those of Bob Cohen, the Interpublic forecaster, who believes worldwide adspend will grow at 6.1 per cent.

Sorrell warns some factors may put a damper on income, including commodity price inflation and the weak dollar, which might destabilise the US economy.

Sorrell has also expressed concern about continuing pressure from retailers to demand discounted rates paid to agencies.


- Billings up more than 5 per cent to £19.6 billion

- Revenue up almost 5 per cent to £4.3 billion

- Pre-tax profits up more than 15 per cent to £546 million

- Operating margin up 1.1 per cent to 14.1 per cent

- Final dividend up 20 per cent to 5.28p per share