) reported solid full-year 2012 results with revenues of $16.43
billion (£10.37 billion) compared with $15.89 billion (£10.02
billion) in the previous year. The healthy year-over-year
increase in revenue was attributable to strong performance in
almost all the geographic segments except Western Continental
Europe. Earnings for 2012 spiked 8.4% year over year to $1.16 per
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Revenues from North America climbed 4.7% year over year to $5.63
billion (£3.55 billion), buoyed by a relatively strong growth in
the Advertising and Media Investment Management businesses, which
more than offset declines in Consumer Insight, Public Relations
and Public Affairs, and Branding & Identity, Healthcare and
Specialist Communications businesses. Revenues in UK improved
7.7% to $2.03 billion (£1.28 billion), driven by a healthy rise
in the advertising and media investment management
In Asia-Pacific, Latin America, Africa & the Middle East and
Central and Eastern Europe, revenues rose 5.7% year over year to
$4.93 billion (£3.11 billion), driven largely by robust
performance in the Middle East, Latin America, and the BRIC
countries. However, revenues in Western Continental Europe
declined 2.6% year over year to $3.87 billion (£2.44 billion),
due to continued eurozone crisis.
By segments, Branding and Identity, Healthcare and Specialist
Communications was the strongest performer in 2012 with an 8.0%
year-over-year increase in revenues, followed by Public Relations
& Public Affairs (3.6%), Advertising and Media Investment
Management (2.8%), and Consumer Insight (0.1%). For full year
2012, EBITDA was up 7.0% to $2.79 billion (£1.76 billion), while
operating profit increased 7.1% to $2.42 billion (£1.53 billion).
Free cash flow for full year 2012 aggregated to $1.73 billion
(£1.094 billion), bulk of which was utilized for acquisitions and
investments. WPP completed 65 acquisitions worldwide across all
the business segments in the year. The company increased its
half-yearly dividend payout by 15% to $0.31 per share (£0.1971),
bringing its tally for the year to $0.45 (£0.2851). At year-end
2012, net debt was $4.47 billion (£2.82 billion) compared with
$3.91 billion (£2.47 billion) in the year-ago period. Cash and
short-term deposits at year-end 2012 were $3.09 billion (£1.95
Going forward, the company expects 2013 to be similar to 2012,
albeit a little less challenging due to increased client
confidence despite a turbulent macroeconomic environment and
sovereign debt issues. WPP expects a like-for-like revenue and
gross margin growth of around 3% and operating margin improvement
of 0.5 margin points in 2013, with a primary focus of revenue and
gross margin growth at a faster rate than the industry average.
The company expects to achieve it by its market-leading position
in the new markets, in new media, and in consumer insight.
At the same time, WPP expects to remain active on share buybacks
and acquisition binge to extend its footprint as well as
consolidate its leading position in existing markets. WPP should
also remain wary of tough competition from other players in the
market such as
Clear Channel Outdoor Holdings Inc.
Publicis Groupe SA
AirMedia Group Inc.
). WPP currently has a Zacks Rank #3 (Hold).
Note: 1 £ = $1.5847 (period average from Jan 1, 2012 to Dec