WPP, headed by chairman and CEO Sir Martin Sorrell, said that full-year revenue for 2002 was down by almost 3% to 拢3.9bn. The results were largely in line with analyst estimates, who had been forecasting profit before taxation, goodwill and impairment, fixed asset gains and investment write-downs of around 拢394m. Earnings per share fell by 19% to 24.9p, marginally ahead of a consensus forecast of 24.24p.
The company hit its revised operating margin target of 12.3%.
WPP's advertising and media revenues, generated by companies such as Ogilvy & Mather, J Walter Thompson, Y&R Advertising and Mediaedge:cia, grew by 2.5% to account for 46.5% of the company's total revenues.
However, this growth was offset by an 8% decline in public relations and public affairs revenue, which includes consultancies such as Burson-Marsteller, Ogilvy Public Relations and Finsbury.
While the company is predicting that 2003 will be difficult, it also highlighted a few bright spots, such as an estimated 拢474m in new wins for 2003 so far, and a rise in advertising and media investment management revenues of 1%. WPP's North American operations are showing the first increase in revenues in seven quarters, with a 2% rise in the final quarter of the year.
In a statement, Sir Martin said the possibility of an Iraqi conflict has increased levels of uncertainty. "As a result, 2003 will likely be another difficult year, with hopes for a more significant recovery being pinned on 2004 and the positive impact of quadrennial factors such as the US presidential election, political advertising in the US pushing up media rates, the Athens Olympics and the European Football Championships."
Sir Martin is famous for his description of the economy in terms of graphs shaped like household items. In its statement, WPP said: "Worldwide economic conditions are likely to remain difficult in 2003 particularly given the uncertainty created by the prospect of a war in Iraq. A bath-shaped or saucer-shaped recovery, where the upturn is gradual, still seems most likely, although the bath does seem to have deep corrugations."
In the long term, WPP says the outlook is very favourable. "Advertising and marketing services expenditure as a proportion of gross national product should resume its growth and once more bust through the cyclical high established in 2000," it said.
Shares in WPP rose when the market opened, climbing 1.12% or 4.5p to 407p.
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