WPP Q3 Revenues Up 17%; To Buy Majority Stake In MInteraction - Update

(RTTNews) - British advertising group WPP Group Plc (WPPGY, WPP.L), Friday, in a trading update for the third quarter said revenues grew by 16.7% from last year. The growth was 6.7% in constant currencies, while like-for-like sales growth declined 8.7%. Separately, WPP announced that it will acquire a 51% stake in mInteraction Co. Ltd., a digital agency in Thailand. The company noted that reported revenues for the third quarter increased 16.7% to GBP 2.007 billion from GBP 1.719 billion in the prior-year quarter. In Dollar terms, total Group revenue for the quarter grew 1.5% to US$3.29 billion from US$3.24 billion in the same quarter last year.

According to the company, revenues in constant currencies increased from the preceding year, due to the acquisition of Taylor Nelson Sofres Plc and the weakness of the pound sterling against the US dollar and Euro. Excluding the impact of acquisitions and currency fluctuations, like-for-like revenue growth was down 8.7%. Like-for-like gross margin was down less at negative 8.3%, the company said.

Segment-wise, Advertising & Media Investment Management revenues for the quarter decreased 2.5% to GBP 765.6 million from GBP 785.3 million in the prior year. Like-for-like growth was down 9.8%. Consumer Insight revenues surged 114.6% to GBP 529.5 million from GBP 246.7 million last year. Like-for-like growth was down 10%. Public Relations & Public Affairs segment reported revenues of GBP 189 million, up 2.6% from prior year's GBP 184.2 million. Like-for-like growth was down 8.5%. Branding & Identity, Healthcare and Specialist Communications revenues increased 4% to GBP 523.1 million from GBP 503.1 million in the previous year. Like-for-like growth was down 5.9%. In the Communications services sector, the company noted that all services sectors improved from the preceding second quarter. On a like-for-like basis, branding & identity, healthcare and specialist communications was least affected, with the healthcare businesses continuing the improvement seen in the second quarter. In its advertising and media investment management, the company witnessed continued pressure during the third quarter, due to reductions in clients' traditional media spending and media deflation, while the Group's advertising business improved relatively. Geographically, WPP experienced relative improvement in revenue growth in the U.S., with like-for-like growth of negative 6.1%. Revenues from North America increased 18% to GBP 704.5 million from GBP 596.9 million a year ago, while constant currency growth was 3%. In the U.K., revenues for the quarter grew 9.1% to GBP 244.3 million from GBP 224 million a year ago. Like-for-like growth in the U.K., was a negative 9%.

Western Continental Europe revenues increased 24.8% to GBP 506.4 million from GBP 405.7 million last year. Like-for-like growth was negative 12.5%. Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe, reported revenues of GBP 552 million, up 12% from GBP 492.7 million recorded last year. Like-for-like decline was 8.3%.

For the first nine-month period, reported revenues grew 24.5% to GBP 6.295 billion from GBP 5.058 billion in the previous year. In constant currencies, revenues were up 8%, due to the acquisition of TNS and the weakness of the pound sterling against the US dollar and Euro. On a like-for-like basis, excluding the impact of acquisitions and currency fluctuations, revenues were down 8.4% and like-for-like gross margin was down less at negative 8.0%. Looking ahead, the company still expects the second half to show a marked improvement in profitability, both absolutely and in terms of maintaining second half margins at prior year levels. WPP also said that the sequential quarterly improvement should continue into the fourth quarter of 2009 and into 2010. The Group added it continues to concentrate on its long-term targets and objectives of improving operating profits by 10-15% and also improving operating margins by half to one margin point per annum or more depending on revenue growth.

Separately, WPP announced that it will acquire a 51% stake in mInteraction Co. Ltd., a digital agency in Thailand, subject to regulatory approvals. mInteraction will form part of GroupM, the media investment management parent company, the company said.

mInteraction, with 45 people and clients including Cadbury, Ford, Nike, Sony and Unilever, generated revenues for fiscal 2008 of THB 35.4 million, and had THB 52.3 million gross assets at the end of 2008. WPP.L is currently trading at 566.5 pence, up 21.5 pence or 3.94%, on a volume of 4.54 million shares.

WPPGY closed Thursday's regular trading at $45.13 on the Nasdaq.

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