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In releasing its FY 2012 results, which are more or less exactly in line with expectations, WPP has once again demonstrated its resilience, while issuing robust 2013 guidance, even though visibility as to the advertising trend remains limited. The group is banking on 2013 organic growth at a similar level to that seen in 2012 (c. 3%) and a further improvement in the operating margin (up 0.5 points to 15.3% in 2013e). The company’s valuation remains reasonable (relative to its peers).
Following a slightly disappointing revenues trading update Q3 2012 and a slightly revision of its 2012 organic growth target, the WPP group is nevertheless banking on an uplift in its operating margin (+0.5% vs 2011). Following 2012, a “maxi-quadrennial” year (impacted by events such as the Olympics, the European football championships and the US presidential elections), the advertising trend for 2013 will be less strong than in 2012. Advertising agencies became more cautious with Q3 results publications and next year organic growth guidance. For the management of WPP, it doesn’t mean that revenues will be flat in 2013. A “low to mid single digit” organic growth rate seems really credible, taking in account the potential growth in digital advertising (33% of current sales) and the continuing high potential of emerging markets (28% of current sales). Moreover, the recent M&A policy of the group focussed on these two strategic axes.
As it released its interim results, which were at the lower end of the consensus range, WPP sounded a little more cautious - like its peers - particularly as regards the advertising outlook for late 2012 and 2013, leading the group to revise its 2012 organic growth target down from 4% to 3.5%. The group remains positive, however, on its target operating margin (2012e: up 0.5 points to 14.8%). The group’s current valuation does not reflect the longer-term growth outlook.
With better than expected 2011 results, the WPP group is envisaging the current financial year with real confidence. 2012 is a maxi-quadrennial year (with events which are held every four years such as the Olympics, Eurofoot and the US Presidential elections). The advertising trend in 2012 will be at least as good as it was in 2011. A majority of the group’s clients are planning to increase their advertising budget, while those which had been anticipating a reduction will focus more on digital, a business with a higher margin for the agencies. WPP forecasts organic growth of 4% in 2012, attributable primarily to the development of digital advertising (30% of 2011 sales) and the potential of the emerging markets which remains high (29% of 2011 sales).
WPP, the world’s leading advertising and market research group, published very good 2011 results, slightly ahead of expectations, with an operating margin up 110 bps yoy. By geographical area, the North American market reported the expected slowdown, while the UK posted robust growth and Europe remained weaker. Emerging markets still lead the field. The management’s message is optimistic for 2012 (a maxi-quadrennial year) and cautious for 2013. Attractive valuation.
After a 3rd quarter which brought no surprises, the group has confirmed its adjusted forecasts for 2011 with October revenues on budget and higher still in November. For 2012 (a maxi-quadrennial year), WPP is anticipating preliminary organic growth of 4%, a slightly better figure than the group’s first estimates. On the strength of its positioning in the EM zones and in digital advertising, WPP also benefits from an attractive valuation.
This morning, the world’s leading advertising and market research group published first half results slightly ahead of consensus expectations, notably for its operating profit. By geographical area, the North American market reported the expected slowdown, while Europe recovered strongly in Q2 (two figure growth in Germany). The group continues to benefit from its good exposure to emerging markets. The management’s message is somewhat more conservative for 2011 (guidance down slightly). Attractive valuation.
Although 2011 is not particularly rich in events (NB: 2012 will be a “maxi-quadrennial” year!), WPP remains an ideally positioned investment vehicle to benefit from the recovery of global economic growth, thanks in particular to its broad geographical base, including just under 30% of its sales in emerging markets. Because of the group’s profile, two-figure profit growth in the next few years seems achievable.
The world leader in communication services published solid 2010 figures (slightly above expectations), confirming faster growth in Q4. Its competitors (Omnicom, Interpublic and Publicis) had also announced good results. To judge by the latest comments by its CEO, the 2011 guidance of the English group is encouraging but unsurprising. WPP continues to focus mainly on the emerging markets (35% of current turnover) and digital business (29% of current turnover).
Advertising agencies remain an attractive investment vehicle because they benefit from the recovery of advertising income. Several structural elements will be prominent in the next 3 to 5 years: growth of the emerging markets, development of digital advertising and renewed expansion of margins (improved organic growth and good cost control). WPP is ideally positioned to benefit from all the above. PLUS code confirmed.
Advertising agencies are still a good investment vehicle to profit from the economic recovery. WPP has developed a first class range of services, with the emphasis on non-media (activities other than advertising in the traditional mass media) and expansion in the emerging countries, making the group No.1 in the BRIC countries, as well as outstanding expertise in digital advertising and market research.
With the publication of encouraging quarterly figures (generally in line with expectations), the world Number One in communications services benefited from a distinctly more favourable comparison base. The British group has raised its outlook for 2010. WPP is now banking on a 100bp rise of its operating margin to 12.7%, accompanied by >2% organic growth. Like the other agencies (Havas, Publicis, Onmicom), WPP should be able to report a further strong improvement in Q2. PLUS code unchanged.
With the publication of strong 2009 figures (generally in line with expectations) , the world number one in communication services proved reassuring, even if its prospects for 2010 remain subdued, notably in the 1st half. Furthermore, WPP is banking on a 100bp rise of its operating margin to 12.7% in 2010 and 13.2% in 2011. The group is continuing its cost-cutting efforts (12% reduction of staff in 2009). Sensitive to an economic upturn, WPP is active in a “late cycle” business which is still only at the beginning of its recovery phase. PLUS code unchanged.
Active on a rapidly changing advertising market, WPP has developed a first class range of services, with the emphasis on non-media activities (activities other than advertising in traditional mass media) and expansion in the emerging countries, making the group No. 1 in China, India and Brazil. Cyclical by nature, WPP is benefiting from the economic recovery in the US thanks to its presence on that market. PLUS code confirmed.
With the publication of slightly better than expected figures, the world No. 1 in communication services confirmed that it has now progressed beyond the low point for the year (Q2). WPP has also maintained its operating margin forecasts. To achieve its aims, the Group has made major cost-cutting efforts (reduction of the headcount by 10% since the start of 2009). WPP is sensitive to macroeconomic recovery; we believe it is well placed to benefit fully from this upturn, especially in the emerging countries. PLUS code confirmed.
The world leader in communication services has published half-yearly results which, as expected, were not fantastic. The trend of advertising revenue deteriorated further in Q2 and bottomed out in June. The group, which had some difficulty in controlling its operational costs, finally adopted measures which are expected to bear fruit in the 2nd half of 2010. Because it is responsive to the economic recovery, we believe that WPP is in a good position to fully benefit from the upturn. The valuation of this share is moderate. PLUS code confirmed.
Active on a rapidly changing advertising market, WPP has developed a first class range of services, with the emphasis on non-media activities (activities other than advertising in the traditional mass media) and expansion in the emerging countries, making the group No. 1 in China, India and Brazil. Cyclical by nature, WPP will benefit from the economic recovery thanks to its presence on the US market. We are introducing this share with a PLUS code.
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