WPP Group today said its revenue in organic terms (factoring out the impact of currency fluctuations and the impact of acquisitions) fell 8.7 percent during the third quarter to $3.319 billion, compared to the same period a year ago.
The U.K.-based holding company noted that the 8.7 percent decrease was an improvement on the 10.5 percent organic dip it suffered in Q2, and said in an earnings statement, “Overall conditions are less worse, reflecting no Armageddon” for the marketing communications industry. The Q3 numbers were better than analysts had expected, and the firm’s shares rose 4.5 percent in initial trading on the London Stock Exchange.
For the first nine months of 2009, the firm notched total revenue of $10.4 billion, an 8.4 percent slide in organic terms compared to the first three quarters of 2008.
Viewed in constant currencies, WPP’s revenue improved 6.7 percent in Q3 and 8 percent so far in ’09, largely due to its acquisition of research giant Taylor Nelson Sofres.
Overall, the company’s performance this year has been mostly in line with its chief competitors, all of which have struggled too various extents during the global economic crisis.
WPP was generally upbeat today, noting that consumer and corporate confidence is on the rise compared to a year ago, but conceding that “confidence remains fragile” owing to high unemployment and the lingering effect of last year’s economic meltdown.
Indeed, WPP — like its brethren — has cut back on staff, and noted a 10 percent reduction in headcount to 101,333 since the year began.
The company expects to notch a flat performance in 2010.
In a research note, analysts at UBS said shares would react positively based on today’s update, but they were hesitant to revise their broader outlook: “We believe WPP would need to see robust full-year revenue growth in 2010 to drive meaningful upgrades — in line with management guidance of flat growth in 2010, we see this as unlikely with agency revenue likely to lag GDP recovery given fee pressures from contract renewals.”