The world’s biggest advertising agency WPP (WPP) released better than expected trading for the quarter ended 30 September saying that it had seen a ‘significant improvement’ in the US and China, while Europe returned to growth, giving its shares a 6% boost to 976.5p.
Revenue for the quarter was 5.2% ahead at £3.3bn , up 1.9% on a like-for-like basis and 1.8% excluding data marketing consultancy Kantar, which is being sold to Bain Capital.
The market got spooked a couple of weeks ago after French rival Publicis cut its revenue guidance knocking its shares by 13%, and pulling shares in WPP’s down 4% on the day.
Liberum’s comments that the news was specific to problems at Publicis have been vindicated by today’s strong numbers.
GUIDANCE MAINTAINED
Despite the clear improvement in the quarter, chief executive Mark Read stuck to his prior guidance for the full year of a drop in revenues of between 1.5% and 2% and a 1% fall in margin, saying,’ our growth in Q3 is encouraging but we are focused on delivering these longer-term goals and know there will be twists and turns along the way.’
Business momentum was underlined by new business wins over the first nine months of the year, with Modelez and Ebay added during the third quarter and the retention of other important clients reported. These wins have offset the loss of Ford and American Express.
Under Mark Read the company has been selling-off non-core businesses and adopting a more disciplined capital allocation approach to reduce debt and improve margins. Average net debt in the first nine months was £4.5bn, down by £625m.
