WPP beats rivals as pre-tax profits leap by 18.7%

Sir Martin Sorrell's marketing services group benefits from strong UK performance in advertising, media and PR during 2013

WPP has reported an 18.7% leap in pre-tax profits to £1.29bn for 2013, outperforming its marketing sector rivals.

Sir Martin Sorrell's marketing services group was boosted by a strong performance across its advertising, media and PR divisions in the UK which helped it overcome slower growth at its data investment division.

WPP is the last of the four big marketing services groups to report its financial figures.

Its 18.7% jump in pre-tax profits beat that of Publicis, up 8.8% to £900m; Omnicom, up 2.8% to £612m; and IPG, down 13% to £358m.

The merger between Omnicom and Publicis, which will eclipse WPP as the biggest player in the market, is expected to receive final approval in the coming months.

Full-year revenues at WPP were up 6.2% at £11.01bn. The UK was a strong performer for WPP in 2013, with revenues up 10.9% to £1.41bn.

Its media and advertising business in the UK – which include the advertising agencies JWT, Ogilvy and media agencies Mindshare and Maxus – helped operating profits increase by 15.7% to £205m.

Its UK PR division – which includes Hill + Knowlton and Burson-Marsteller – also performed strongly in the year.

However, its data investment management unit, made up of the Kantar group which includes TNS and Millward Brown, struggled to match the UK growth rates across the rest of the business.

WPP attributed this to companies using their own data, as opposed to being reliant on third-party information.

WPP's big advertising networks of JWT, Ogilvy & Mather, and Grey performed well in North America, while Y&R performed strongly in the UK.

The group made 62 acquisitions in the year, 32 of which were in new media.

Sorrell has said that he is not in the market for making a mega-deal but will instead focus in making new acquisitions in the new markets of digital and data investment management.

WPP said it anticipated "slightly increased client confidence" in 2014, buoyed by the Fifa World Cup in Brazil.

However it added that "All in all, 2014 looks to be another demanding year, as a strong UK pound and weak fast-growth market currencies continue to take their toll on our reported operating margins."

In its results, WPP flagged up the vote on Scottish independence and uncertainty about Britain's continued membership of the EU as potentially having a significant impact on its business.

WPP said they would "add further uncertainty to the UK economy until and after the next general election in 2015".

But it was optimistic about the impact of both the World Cup and Olympics in Brazil, predicting that the World Cup should be a "great tournament" despite infrastructure and social issues.

Sorrell, who has just celebrated his 69th birthday, said he has no plans to retire.

Questioned whether he would still be chief executive of WPP at the age of 75, he said: "I wouldn't comment on that. It is for the board to decide whether I am senile or not."

Sorrell reiterated claims that the Publicis and Omnicom merger was not a "slam dunk".

China is the only remaining market to approve the merger, though Sorrell thinks the merger could still be derailed, citing "concerns" from the "content industry" in China about the deal.

He also said that programmatics – the automated means of buying advertising spots – is an increasingly important part of the business with billings growing to about $800m (£480m), some 10% of WPP's overall media trade.

WPP's shares were down 5.26% to 1260p in early trading.

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John Reynolds

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