Revenue spiked at advertising giant WPP in the first three months of the year, jumping 10.5 per cent to £3.1bn, well above forecasts off the back of strong performance in North America.
Reported revenue climbed 10.5 per cent in sterling terms to £3.1bn. On a constant current basis, revenue was up nine per cent and like-for-like revenue was up 5.1 per cent.
WPP scooped new business worth $1.8bn (£1.23bn) in the three months to March – up from $1bn in the same period last year.
Total billings – reflecting the sheer quantity of work taken on by the advertising network headed up by Sir Martin Sorrell – were up 8.3 per cent to £11.9bn in the quarter.
North America provided both the highest sales figures and also the strongest growth rates for WPP. Sales there came in at £1.2bn – up 15 per cent on last year.
The UK accounted for £451m of WPP's revenue – up 8.2 per cent.
Why it's interesting
As a global company that operates in a highly competitive and consumer-facing industry, WPP's results are a decent insight into the state of the world economy.
Revenues went up in every single region for the group, though it was advanced economies – North America, western continental Europe and the UK – where growth was most robust.
For opponents of high pay – and there have been quite a few lately – these results are probably not what they wanted to see. Sir Martin Sorrell, who has been at the helm of WPP since the 1980s, regularly tops the lists of best-paid chief executives.
Defenders say he is a one-man success story who has carved WPP into the organisation we know today – creating immense value for shareholders in the process. Opponents argue that taking home £63m a year is simply too much and shines a light on runaway pay packets that companies are unable – or unwilling – to get under control.
What WPP said
WPP hailed the results as impressive and said that revenue, sales and profitability were all set to be above forecasts. However, the company issued a warning about the general state of the world economy and the challenges WPP – and Sorrell's successor – will need to grapple with.
Despite these encouraging results in the first quarter of 2016 and good prospects for the rest of the year, together with record results in 2015, the company's thirtieth year, following sequential record results from 2011 onwards, clients generally remain cautious. Worldwide real and nominal GDP growth seem stuck in a range of three to 3.5 per cent, with little inflation, consequently little or no pricing power for clients and a resultant focus on costs to achieve profit targets.
If you are running a legacy business, as many of our clients are, you face disrupters like Uber and Airbnb at one end of the spectrum, zero-based cost budgeters like 3G and Coty at the other end, with seemingly short-term focused activist investors in the middle, like Nelson Peltz, Bill Ackman and Dan Loeb. There is, therefore, considerable pressure in the system.