WPP, the world’s second-biggest advertising group, said yesterday that net profits dipped last year and admitted that a “vicious” global recession would take its toll this year.
Net profits declined by 5.8 percent to £439.1 million (US$624 million) last year, largely because of higher operating and staffing costs, WPP said in a results statement.
WPP, which stands behind only US titan Omnicom in its sector, added that revenues jumped 20.9 percent to £7.48 billion, while pre-tax profits added 3.8 percent to £513.9 million.
SHARP DOWNTURN
Turning to this year’s outlook, WPP said that a sharp worldwide economic slowdown would hurt the group.
“[This year] was always likely to be a weaker year but the unprecedented current financial crisis has triggered a vicious recession across the globe,” WPP said. “Geographically, there are relatively brighter spots budgeted in Asia Pacific, Latin America and the Middle East.”
It added: “The United States and Western Europe remain relatively weaker, with recession biting hardest there and in Southern Europe.”
The London-listed advertising giant also cut its forecasts for operating margins this year and next year because of the fragile condition of the advertising market.
But it said: “Although the economic gloom has heightened recently, with further earnings disappointments, surprise dividend cuts, continued financial restructurings and rights issues, we still believe there will be a recovery of sorts in 2010” because of major monetary and fiscal measures by authorities.
TAKEOVER
WPP said it was continuing to absorb Taylor Nelson Sofres, the British market research firm it bought last year for £1.2 billion and that cost-savings were ahead of forecasts.
The group expects to achieve operating margins of 14.3 percent this year, flat compared with last year, after the takeover.
Revenues were forecast to drop by 2.0 percent in the current financial year before recovering next year.
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