WPP Quarterly Revenue Growth Slowest Since 2012 -- Update

By Nick Kostov

WPP reported its slowest quarter of revenue growth since 2012 as clients spent less in the U.S. and U.K.

The world's largest advertising company also forecast slower growth for 2017, reflecting fewer new business wins in recent months and what it describes as a "tepid" macroeconomic environment.

Like-for-like net sales--a measure used to judge the company's underlying performance--rose 2.1% in the three months to Dec. 31, its slowest growth since the third quarter of 2012. WPP said that particularly strong sales growth in the same period a year earlier made the latest figures look weaker.

The U.K.-based company, whose agencies include Mindshare and JWT, said on Friday that net profit rose 21% last year to 1.4 billion pounds ($1.72 billion). Revenue rose 18% to GBP14.39 billion.

Run by Chief Executive Martin Sorrell, WPP has expanded its digital operations and made acquisitions to outpace rivals like Omnicom Group Inc. and Publicis Groupe SA as spending for ads in traditional media has slowed in recent years.

However, the group has posted a relatively slow start to the year, with January like-for-like net sales up 1.2% from the same period last year. WPP said it is budgeting for around 2% growth in both revenue and net sales for 2017.

"Clients are generally grinding it out in a highly competitive ground game, rarely resorting to a passing game or Hail Marys," the company said, adding that the year would be influenced by the buildup for the Russian World Cup and the mid-term Congressional elections in the U.S.

The company said it was cautious about the economic outlook and its clients' inclination to spend on advertising campaigns.

The outlook "will not be taken well," said Charles Bedouelle, an analyst at Exane.

He said that it reflects the loss of some large media buying accounts in 2016 with companies like AT&T Inc. and Volkswagen AG as well as pressure from clients to get more for their marketing dollars.

WPP raised its dividend to 56.6 pence from 44.69 pence.

-Write to Nick Kostov at [e-mail]

(END) Dow Jones Newswires

March 03, 2017 03:12 ET (08:12 GMT)

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