Quarterly Trading Update
WPP Group PLC
26 April 2000
QUARTERLY TRADING UPDATE
FIRST QUARTER REVENUES UP OVER 20% IN CONSTANT CURRENCIES
OPERATING MARGINS ON TARGET TO IMPROVE BY 0.6% IN 2000
Revenue growth
In constant currencies, first quarter revenues rose by
over 20%. As sterling weakened against the dollar, but
strengthened against the major European countries, there
was little net impact on reportable revenues which were
up by almost 20%.
As shown in the Appendix to this release, on a constant
currency basis, the geographical pattern of revenue
growth varied in the first quarter. In North America,
revenues were up almost 20%. In Europe, the U.K. was up
over 17% and Continental Europe was over 23%. Asia
Pacific, Latin America, Africa, and the Middle East grew
by over 22% reflecting economic recovery in those
regions.
By function, advertising and media investment management
was up over 14%, information and consultancy over 28%,
public relations and public affairs over 49% and branding
& identity, healthcare and specialist communications over
16%.
Net new business billings of £532 million ($878 million)
were won during the first quarter. This compares to £447
million ($738 million), up 19% on the comparable quarter
last year. The Group continues to benefit from
consolidation trends in the industry, winning several
large assignments from existing and new clients and from
growing dot.com assignments. With regard to the latter,
the Group is well placed with balanced client bases in
both the traditional and new economies - effectively it
has a strong market position in both.
Current trading
For the first quarter, the Group was above budget and
significantly ahead of last year. First quarter
performance indicates that the Group will achieve its
objective of a further 0.6% improvement in reported
operating margins from 13.4% to 14.0% in 2000.
Balance sheet and cashflow
The Group continues to implement its strategy of using
free cashflow to enhance shareowner value through a
combination of strategic acquisitions and share
purchases.
In the first quarter of 2000 the Group completed
acquisitions in advertising in the Middle East, the
Netherlands and Spain; in public relations and public
affairs in Poland; and in branding & identity, healthcare
and specialist communications - in direct in the United
Kingdom, in identity and branding in Australia and
Singapore and in interactive in Canada.
Two million WPP shares were purchased during the first
quarter at an average price of £10.61p and total cost of
over £21 million. The rolling buy-back programme
continues at an increased target level of £100 million
per annum, equivalent to approximately 1% of the current
market capitalisation.
Average net debt rose during the first quarter to £230
million from £138 million in the same period last year in
constant currencies and compares to a market
capitalisation of approximately £7 billion. This reflects
the £322 million spent on capital expenditure,
acquisitions, share purchases and dividends in the
previous twelve months. Free cashflow over the same
period was £222 million.
Future objectives
The Group continues to focus on its key objectives of
improving operating profits and margins, increasing cost
flexibility (particularly in the areas of staff and
property costs), using free cashflow to enhance
shareowner value, continuing to develop the role of the
parent company in adding value to our clients and people,
developing our portfolio in high revenue growth
geographic and functional areas and improving our
creative quality and capabilities.
For further information:
Martin Sorrell )
(44) 20 7408 2204
Paul Richardson)
(1) 212 632 2325
Feona McEwan )
www.wpp.com
This press release may contain forward-looking statements
within the meaning of the federal securities laws. These
statements are subject to risks and uncertainties that
could cause actual results to differ materially including
adjustments arising from the annual audit by management
and the companys independent auditors. For further
information on factors which could impact the company and
the statements contained herein, please refer to public
filings by the company with the Securities and Exchange
Commission. The statements in this press release should
be considered in light of these risks and uncertainties.
Appendix: Revenue and revenue growth by region and sector
3 months ended March 31, 2000
Revenue Constant
Growth currency
Reported growth1
Region 2000 1999 00/99 00/99
£m £m % %
North America 260.0 212.9 22.1 19.9
United Kingdom 111.1 94.5 17.6 17.6
Continental Europe 101.5 91.5 10.9 23.3
Asia Pacific, Latin
America, Africa,
Middle East 85.4 66.9 27.7 22.2
----- ----- ----- -----
Total Group 558.0 465.8 19.8 20.4
Revenue Constant
Growth currency
Reported growth1
2000 1999 00/99 00/99
Sector £m £m % %
Advertising, Media
Investment
Management 249.5 219.5 13.7 14.5
Information &
Consultancy 113.5 89.1 27.4 28.4
Public Relations
& Public Affairs2 56.2 37.4 50.3 49.3
Branding & Identity,
Healthcare and
Specialist
Communications 138.8 119.8 15.9 16.0
Total Group ----- ----- ----- -----
558.0 465.8 19.8 20.4
1 Constant currency growth excludes the effects of
currency movements.
2 The revenue figures submitted to the O Dwyer Report
reflect some public relations income which is included
here in advertising, media investment management and
branding, identity, healthcare and specialist
communications. Total public relations and public affairs
revenues grew by almost 46% to $106 million in the three
months to March 31st.