WPP FY13 Profit Up, Sees Growth In FY14, Cuts Long Term Margin View; Stock Down

(RTTNews) - Advertising giant WPP Plc. (WPP.L, WPPGY) reported Thursday a higher profit for its fiscal 2013 as revenues were benefited by strong performances particularly in the faster growing markets. Further, the company announced higher dividend, with a good start in fiscal 2014 with higher sales in January.

The company projects 2014 growth in revenue and margin, but trimmed long-term margin expansion forecast. WPP shares declined around 5 percent in the morning trade in London.

For fiscal 2013, pre-tax profit climbed 18.7 percent to 1.30 billion pounds from last year's 1.09 billion pounds. Headline profit before tax, which excluded certain items, totaled 1.46 billion pounds, compared to 1.32 billion pounds in the previous year. Headline earnings per share were 80.8 pence for the year 2013, compared to 73.4 pence last year.

In the year, headline profit before interest and tax or PBIT grew 8.5 percent year-over-year to 1.66 billion pounds. Headline PBIT margin improved to 15.1 percent from last year's 14.8 percent. Headline EBITDA, a key earnings metric, grew 8 percent to 1.896 billion pounds, giving 0.3 margin points improvement to 17.2 percent. Gross margin or net sales margin improved 0.4 margin points to 16.5 percent.

Annual revenues grew 6.2 percent to 11.02 billion pounds from 10.37 billion pounds last year. At constant exchange rates, revenues grew 5.7 percent. On a like-for-like basis, which excludes the impact of currency and acquisitions, revenues were up 3.5 percent, with gross margin or net sales up 3.4 percent.

In the fourth quarter, like-for-like revenues grew 4.2 percent with stronger growth in North America and Asia Pacific, Latin America, Africa & the Middle East and Central and Eastern Europe. This was offset by lower growth in the United Kingdom.

In the year, billings increased 4.1 percent year-over-year to 46.2 billion pounds, driven by a strong leadership position in all net new business league tables. The company said it continues to benefit from consolidation trends in the industry.

WPP targets a pay-out ratio of 45 percent in 2014. The board declared an increase of 20 percent in the final dividend to 23.65 pence per share, bringing the total dividend to 34.21 pence per share for 2013, with an overall increase of 20 percent.

The company said January like-for-like revenue is up 5.7 percent and gross margin or net sales up 4.1 percent.

Looking ahead for fiscal 2014, WPP projects like-for-like revenue and gross margin growth of over 3 percent. The company also targets operating margin and gross margin or net sales margin improvement of 0.3 margin points excluding the impact of currency.

Over the long term, the company now sees improvement in operating margin and gross margin of 0.3 margin points or more, while it expected growth of 0.5 points or more earlier.

The company continues to expect annual headline earnings per share growth of 10 percent to 15 percent and revenue and gross margin greater than the industry average.

WPP said its strategic targets raised for each of faster growth markets and new media sectors to 40 to 45 percent and revenues from 35 to 40 percent over the next five years. Its share buy-back target has been raised to 2 percent to 3 percent of share capital against current 1 percent.

Kin London, WPP shares are currently trading at 1,260 pence, down 71 pence or 5.33 percent.