WPP WPP PLC

By Nick Kostov 

PARIS-- WPP PLC, the world's largest advertising holding company, on Monday said a strong quarter from its North American business helped it post a rise in sales, but warned that many of its clients continue to focus on cutting costs rather than growing revenues.

The London-based owner of ad agencies such as Ogilvy & Mather and Grey said sales for the three months ended Sept. 30 rose 5.9% to GBP2.9 billion ($4.44 billion) from a year earlier.

But concerns over Russia's intervention in Syria and China's wobbly economy weighed on revenue growth and WPP shares fell 2.6% in morning trading.

In an interview, Chief Executive Martin Sorrell said corporate clients were focused on cost-cutting following increased geopolitical tensions and greater scrutiny from activist investors. Clients were also being squeezed by lighter, more nimble competitors. WPP is closely watched for clues on the health of large companies, because investors consider it a bellwether due to its global client list.

"It's a slog," Mr. Sorrell said, adding he expected the situation to remain broadly the same in 2016.

WPP has a substantial international presence and its sales in euros and many emerging market currencies took a hit when converted back into pounds.

"What you see in the mature markets...can make up for the softness that you see in Asia and Latin America," Mr. Sorrell said.

Still, WPP's revenue growth is the latest sign the ad industry is staging a tentative recovery. Many of WPP's rivals have reported a boost in sales. Apart from strength in the North America, Mr. Sorrell said a return to growth in western continental Europe also underpinned the increase in revenues.

Only Paris-based rival Publicis Groupe SA is struggling. Last week, the French firm reported softening demand from its U.S. clientele.

WPP also appears to be taking advantage of an industrywide shake-up by advertisers who have placed their contracts with ad agencies under review. That has allowed WPP to steal clients from competitors, landing new contracts with pharmaceuticals company GlaxoSmithKline PLC and U.S. food company General Mills Inc. However, the firm lost its account with lender Citigroup Inc.

WPP said like-for-like net sales--a revenue measure which strips out costs linked to acquiring digital media space and currency swings, acquisitions and disposals--rose 3.3% in the third quarter. The group reaffirmed its full-year target, saying it expects like-for-like net sales to grow more than 3%.

Write to Nick Kostov at Nick.Kostov@wsj.com

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(END) Dow Jones Newswires

October 26, 2015 08:01 ET (12:01 GMT)

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