World's largest advertising agency warns of Brexit uncertainties
Companies: WPP Plc
Marketing and advertising giant WPP Group beat expectations in Q3 according to figures released by the FTSE 100 firm this morning. Management said revenues had risen 23.4% to £3.6bn, as weak sterling boosted performance, but confirmed they believed UK performance was seeing the first signs of Brexit uncertainty.
The company reported revenue growth of 4.3% in North America, as PR & public affairs and branding & identity showed improving trends compared to Q2. In the UK, WPP reported 5.9% revenue growth and like-for-like sales growth of 2.1%, slower than Q2. The company said most of its divisions softened, "perhaps" the first signs of Brexit anxiety:
"All parts of the Group's businesses, except data investment management and public relations and public affairs softened, with net sales growth showing a similar pattern, up 2.7% like-for-like, compared with 3.4% in the second quarter. Perhaps, the first signs of Brexit anxiety."
Performance in Western Continental Europe grew at "reasonable" rates, reflecting continued "difficult political and macro-economic conditions", in Q3:
"...like-for-like revenue growth of 5.4% and net sales growth of 3.2%, compared to 6.2% and 6.2% respectively in quarter two. Belgium, Denmark, Finland, Germany, Greece, Ireland, Italy, Sweden and Turkey performed strongly, with Austria, France, Spain and Switzerland slower."
APAC, LATAM, MEA, and Central and Eastern Europe showed the strongest growth in Q3 with constant currency growth of more than 12%, as performance in China, Korea, India, Malaysia, Indonesia, Pakistan and Thailand offset weaker performance in the Philippines and Singapore.
"Net sales followed a similar pattern to revenue, up 11.9% in constant currency and up 2.2% like-for-like, slightly weaker than the 14.1% and 3.8% respectively in quarter two."
Management is now forecasting growth in revenues and organic sales of over 3% for the full-year, a less enthusiastic message than the company's targets in August.
The company share price opened up 4% today, trading on a P/E of 18x.