LONDON--WPP PLC (WPP.LN) said Thursday it is in the process of
reviewing its forecasts as it reported an 8.3% rise in
first-quarter revenue in sterling terms, boosted by favorable
currency swings and strong growth across regions except West
Continental Europe.
The world's largest advertising agency added that based on early
indications, like-for-like revenue and net sales growth will be
over 3%, with a stronger second half, partly the result of easier
comparatives. It added that it is considering raising the dividend
payout ratio from 45%, after achieving this target a year ahead of
schedule. It set the current 45% ratio in June 2013 and expected to
achieve this over the following two years.
WPP, which owns agencies such as Ogilvy & Mather and Grey,
said revenue rose to 2.78 billion pounds ($4.18 billion) from
GBP2.57 billion as strong growth in the U.S. and U.K. again offset
falls in Western Continental Europe. Net new business was almost $1
billion in the first quarter, compared with $1.28 billion in the
first quarter last year.
WPP also benefited from more favorable currency swings in the
quarter after a strong British pound against the U.S. dollar and
euro weighed on profit last year, a trend that somewhat reversed in
the last quarter of 2014.
In the first quarter, comparable net sales--a closely tracked
revenue measure which strips out costs linked to acquiring digital
media space and currency swings, acquisitions and disposals--rose
6% in sterling terms.
Chief Executive Martin Sorrell--known for his colorful economic
predictions--has warned though that companies remain focused on
cutting costs in a fragile economic and geopolitical environment
even as WPP has posted rising sales and profit last year.
A fragile economy in the eurozone, political instability in the
Middle East and the dramatic slowdown of the Russian economy are
among his biggest concerns for clients, Mr. Sorrell said earlier
this year.
Given the uncertainties on the horizon, WPP has targeted sales
and profitability to reach a similar growth rate this year to last
as the group tightly controls operating costs and concentrates on
winning new business by making different agencies work more closely
together.
-Write to Ruth Bender at ruth.bender@wsj.com and Ian Walker at
ian.walker@wsj.com; @IanWalk40289749
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