WPP said it estimates that the impact of the events of September 11 and beyond on the last three weeks of that month alone reduced revenues by at least £21m, without any opportunity to reduce operating costs.
It said if the last three months of the year were impacted in the same way, that like-for-like revenues for the whole of 2001 could be down 2%.
It said third-quarter revised forecasts for the year indicate that it will be very difficult to achieve the group's operating margin objective of 15% in 2001. It noted, however, that the position would be different, if the impact of the events of September and beyond is excluded as exceptional items, as some companies within and outside the advertising sector are doing or planning to do.
In a separate announcement, City regulator the Takeover Panel said that, having considered submissions from WPP and Tempus, the panel executive has ruled that WPP should not be permitted to invoke the adverse material change clause.
There was no response from WPP, but sources yesterday suggested that WPP, knowing the likely outcome of the Takeover Panel's ruling, is resigned to going ahead with its £432m bid to buy media-buying group Tempus.
WPP reported that in the third quarter revenues grew almost 41%.
The impact of September 11 was reflected throughout WPP's results. As well as the £21m lost, it said that constant currency revenues declined over 3%, mainly reflecting the impact of the tragic events on September 11 and subsequent developments in the US.
In North America, revenues were up almost 38%. In Europe, the UK was up over 26% and Europe up over 63%. Asia Pacific, Latin America, Africa and the Middle East grew over 42%.
Public relations outperformed advertising in the third quarter, with public relations and public affairs up over 63% while advertising and media investment management was up 43%; branding and identity, healthcare and specialist were also strongly up, rising over 60%.
The group reported that £390m in new business was won during the quarter, making a total of £1.3bn for the first nine months.
In a statement, WPP said, "The impact of this slowdown initially impacted the technology, media and telecommunications sectors of the economy, although there is some spillover into the 'old' economy. This deceleration has been further materially affected by the tragic events of September 11 and beyond in the US, the effects of which are being felt throughout the world."
It added, "So far, by region, it has most materially affected North America, with proportionately less, though material, impact on the UK and continental Europe and proportionately even less though material impact on Asia Pacific and Latin America."
WPP reported the slowdown has hit PR hardest, followed by branding and identity, healthcare and specialist communications next. Advertising and media investment had been less hard hit, WPP said.