WPP reports record ?1.5 billion annual profit

MUMBAI: For 2014, Martin Sorrell’s WPP Group reported a record ?1.5 billion annual profit in 2014, which was up by 12 per cent on reported revenue of ?11.53 billion, which was up 4.6 per cent year on year.

WPP, which owns agencies such as Ogilvy, J. Walter Thompson, and Milward Brown, said 2015 was off to a flying start. Like-for-like revenue in January rose 6.7 per cent, with like-for-like net sales up 3.9 per cent, which WPP says was stronger than the final quarter of 2014 and 2014 itself.

The agency expects to grow net sales by three per cent in 2015 and is looking at a headline operating margin target of 0.3 margin points, excluding the impact of currency.

WPP’s reported billings at ?46.186 billion, were up 6.8 per cent in constant currency driven by a strong leadership position in net new business league tables. On the other hand, WPP saw like-for-like revenue growth in all regions, led by strong growth in North America, United Kingdom and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, and by all sectors, with particularly strong growth in advertising and media investment management and branding and identity, healthcare and specialist communications (including direct, digital and interactive).

The group's like-for-like net sales growth were at 3.3 per cent, with the gap compared to revenue growth more than the first half, as the scale of digital media purchases in media investment management and data investment management revenue continues to increase.

WPP saw EBITDA growth of 0.7 per cent, up 7.5 per cent in constant currency, reflecting currency headwinds, but giving 0.2 margin points improvement, to 19.0 per cent on net sales, with like-for-like operating costs (+3.1 per cent) rising slower than net sales.

PBIT increase of 1.1 per cent to ?1.681 billion, up eight per cent in constant currency was observed for the year. Net sales margin, a more accurate competitive comparator, up 0.2 margin points to an industry leading 16.7 per cent, up 0.3 margin points in constant currency, in line with target.

WPP saw exceptional gains of ?196 million largely representing gains on the AppNexus and Rentrak transactions completed in the second half, together with other gains of ?45 million, including gains on the re-measurement of the Group’s equity interests, partly offset by ?89 million of restructuring costs, ?39 million of IT transformation costs and ?7 million of investment write-downs, giving a net exceptional gain of ?61 million.

WPP was recognised again in 2014 for creative and effectiveness excellence with the award of the Cannes Lion to WPP for the most creative Holding Company, for the fourth successive year, since the awards inception and another to Ogilvy & Mather Worldwide, for the third consecutive year, as the most creative agency network. In another rare occurrence in the industry, in 2014 Grey was named Global Agency of the Year 2013 by both US trade magazines Ad Age and Ad Week. For the third consecutive year, WPP was awarded the EFFIE as the most effective Holding Company.

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