Analysts had predicted an increase of around 25% in pre-tax profits. However, as expected, the group says that the outlook for 2002 remains flat.
This morning, the group's results showed profit before tax, goodwill, investment gains and write-downs up to £489.9m from last year's figure of £381m, while turnover was up 50% to £20.9bn.
The jump in profits is a result of the acquisition of Young & Rubicam, and not organic growth within the WPP companies. Like-for-like revenues for the year fell by 3% on 2000 -- compared with the 2% predicted by Sir Martin last October -- and like-for-like gross profit was down 4%.
WPP, owner of the J Walter Thompson and Ogilvy & Mather advertising networks, is predicting that advertising and marketing services expenditure will remain flat in 2002. On a more positive note, it said that it is predicting a stronger second half of the year relative to the first.
WPP now generates around 54% of its income from non-advertising related services, including public relations, with the Burson-Marsteller network, research and other marketing services activities. It predicts that while advertising revenue will fall by 3%, marketing services revenue will rise by 3%.
It aims to improve operating margin from the 14% recorded this year to 15% next year, and 15.3% in 2003.
The group's net debt rose from £25m at the end of 2000 to £885m at the end of 2001, after a year that saw WPP named as the most acquisitive company in the UK. It spent £736m on acquisitions last year, including the £434m buyout of Tempus.
Shares in WPP fell when the market opened this morning, trading down by 2.3% to 665p. Earlier in the week, they were trading above the 700p mark.
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