WPP Reports on Another Record Year


LONDON -- WPP -- the world's largest advertising group, whose clients encompass all of the Dow Jones companies, including Microsoft, Proctor & Gamble, and McDonald's -- published its preliminary results for 2012 this morning.

Although reported billings of 44.4 billion pounds was marginally down on 2011 (blamed on the strength of the pound), the company saw revenue growth of 3.5% -- 2.9% on a like-for-like basis -- with particularly strong performances in Asia Pacific, Latin America, Africa, and the Middle East.

A record-high operating margin of 14.8% helped pre-tax profit rise over 8%, to 1.1 billion pounds. Diluted earnings per share dipped 2.6%, to 62.8 pence, owing to an exceptional release of corporate tax provisions last year, but the full-year dividend rose almost 16%, to 28.51 pence.

The company said, "2012, the Group's twenty-seventh year, was like the previous year, a record year, but it felt very different." It also said that while targets were reached, it "got there ugly." While WPP thinks its clients were "in better shape" than 2011, it says that a range of factors -- the continuing fragility of the eurozone, instability in the Middle East, a soft-landing in the Chinese economy, the "elephant in the room" of the U.S. deficit and record debt, and the possibility of an EU-membership referendum in the U.K. -- all conspired to reduce risk-taking.

Whether it "got there ugly" or not, WPP is now up almost 30% on this time last year, and almost 20% for the year to date. Its overall recovery growth over the past few years has been even more impressive -- anyone lucky enough to have bought when WPP dipped to around 300 pence in late 2008 has enjoyed a gain of over 250%.

Looking ahead, WPP thinks that "the pattern for 2013 looks very similar to 2012," and that this year will be "demanding." But it says that 2014 looks to be "a better prospect," with a World Cup in Brazil, and the Sochi Winter Olympics, both of which will help raise the profile of their respective regions.

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