WPP Q3 Revenue Climbs; Sees Higher Revenues Ahead; Stock Up

(RTTNews) - Shares of WPP Group Plc. (WPP.L, WPPGY) were gaining around 4 percent in the morning trading in London on Monday after the advertising giant reported higher revenues in its third quarter, boosted by growth in all regions, on positive currency impact. Looking ahead, the company projects higher revenues and margin improvement for fiscal 2016, and higher profit over longer term.

In its third-quarter trading statement, the company said its revenue went up 23.4 percent to 3.611 billion pounds from last year's 2.927 billion pounds. Revenue in constant currency was up 7.6 percent, reflecting the continuing weakness of the pound sterling against most currencies, following the United Kingdom vote to exit the European Union.

On a like-for-like basis, excluding the impact of acquisitions and currency fluctuations, quarterly revenue was up 3.2 percent.

Reported revenue increased 4.6 percent in US dollar terms to $4.741 billion, and was up 4.2 percent in euros to 4.248 billion euros. In Japanese yen terms, revenues however went down 12.3 percent to 485.4 billion yen.

In the quarter, net sales climbed 23.6 percent to 3.114 billion pounds from 2.518 billion pounds last year. Sales growth of 5 percent was from acquisitions and 15.8 percent from currency. Quarterly constant currency net sales were up 7.8 percent, and like-for-like net sales were up 2.8 percent.

On a geographical basis, revenue growth in North America was 23 percent, and in United Kingdom 5.9 percent. Revenue improved 27.2 percent in Western Continental Europe, while revenues from Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe region climbed 30.3 percent.

For fiscal 2016, WPP projects like-for-like revenue and net sales growth of over 3 percent, with the gap between revenue and net sales growth narrowing further. The company expects headline net sales operating margin improvement of 0.3 margin points in constant currency, with reportable margins likely to be even stronger.

For the year, the company projects stronger-than-competitor revenue and net sales growth. This reflects a leading position in both faster growing geographic markets and digital, premier parent company creative position.

The company also said its prime focus in the year remains on growing revenue and net sales faster than the industry average.

Over the longer term, the company expects revenue and net sales growth greater than the industry average, due to geographically superior position in new markets and functional strength in new media.

WPP also sees improvement in net sales margin of 0.3 margin points or more, excluding the impact of currency, with an ultimate goal of almost 20 percent, and an annual headline earnings per share growth of 10 percent to 15 percent per annum.

In London, WPP shares were trading at 1,771 pence, up 3.69 percent.