��������pk10

LONDON (Brand Republic) - WPP Group says it is on target to improve its operating margins to 15% this year, up by 1% on last year, following results that surpassed analysts’ predictions.

However, WPP saw its shares slip more than 6% to 742p before rising to 769p, as it warned that the slowdown in the US economy had held back its revenue growth.

First-quarter revenues increased by 73.2% to £966.4m, up from £558m last year. Analysts had expected revenues between £900m-£965m.

WPP said that despite the US slowdown, it had benefited from organic growth, its acquisition of Young & Rubicam and the strength of the dollar.

WPP said it continues to benefit from consolidation trends in the industry, winning several large assignments from existing and new clients. Net new billings for the quarter stood at £235m.

WPP also announced the formation of a joint venture, Custom Media Group, with US publisher Forbes to develop a contract publishing business to boost its North American business.

Although virtually unrecognised by the average American, the US contract publishing market has annual revenues of around $1bn-$1.5bn (£0.70bn-£1.04bn). The Custom Media Group will be split equally between the two companies and will design, produce and distribute magazines, newsletters, annual reports and create websites aimed at the clients of companies in the US and abroad.

The deal follows WPP’s acquisition of contract publishing house Spafax last year. Chief executive Sir Martin Sorrell described contract publishing as a “half-way house between editorial content and advertising” and said its role was to build a relationship with the consumer over time.

The company said that the US slowdown had primarily affected its public relations, branding, and healthcare and specialist communications businesses, but admitted advertising and media buying had been affected to some extent.