Ireland-based advertising titan
WPP Group plc
) reported its third quarter 2012 (ended September 30, 2012)
trading results on October 25.
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The company reported revenue of £2,496 million ($3,943 million)
in the third quarter of 2012, reflecting a 1.6% year-over-year
increase (or a 4.8% increase on a constant currency basis). The
1.6% year-over-year growth comprises a 1.9% organic growth, 2.9%
growth from acquisitions and a negative 3.2% from currency
From a geographical perspective (on a constant currency basis),
WPP Group experienced a noticeable recovery in North America with
revenue of £885 million ($1,398 million), reflecting an increase
of 4.0% year over year. Revenue in the United Kingdom grew 8.9%
to £311 million ($491 million), while revenue from the Western
Continental Europe registered a slight 0.5% increase to £537
million ($848 million) and from Asia Pacific, Latin America,
Africa and the Middle East and Central and Eastern Europe revenue
soared 7.4% to £763 million ($1,205 million).
Revenue from Public Relations and Public Affairs grew 3.3% year
over year on a constant currency basis to £227 million ($359
million). Branding & identity, healthcare and specialist
communications witnessed a revenue increase of 10.6% to £679
million ($1,073 million), while revenue from advertising and
media investment management increased 2.2% to £999 million
($1,578 million) while revenue from consumer insight soared 3.5%
to £591 million ($934 million).
Net new business amounting to approximately £1,415 million
(US$2,235 million) was won during the third quarter.
Exiting the third quarter 2012, WPP Group's net debt was £3,556
million (US$5,749 million) versus £2,861 million ($4,468.2
million) in the previous year.
Management apprehends continued weakness in the fourth quarter
and expects organic revenue growth to fall within the 2.5%-3.0%
range. Operating margin is expected to be 14.8%.
WPP Group is based in Dublin, Ireland, and together with its
subsidiaries provides advertising and communications services
worldwide. The Group faces competition from its peers like
Interpublic Group of Companies Inc.
Omnicom Group Inc.
), and Publicis Groupe SA (PUBGY.PK).
The current Zacks Consensus EPS Estimates for WPP plc are $5.69
and $6.24 for years 2012 and 2013, respectively. The estimates
represent a year-over-year growth of 5.8% for 2012 and 6.2% for
We currently maintain a Neutral recommendation on the company.