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LONDON (Alliance News) - Media buying giant WPP PLC Friday reiterated its forecasts for 2014, as it saw revenues rise in the first quarter to end-March, although the strengthening of sterling continued to hamper growth.
WPP expects like-for-like revenue to grow strongly, and "gross margin or net sales growth of over 3%". It is targeting headline gross margin or net sales margin improvement of 0.3 point on a constant currency basis.
Reported revenues in the first quarter were up 1.5% to GBP2.57 billion from GBP2.53 million. The strengthening of sterling continued to hit WPP's results, on a constant currency basis revenue was up 9.6%.
Reported gross margin or net sales declined 1.8% to GBP2.28 billion from GBP2.32 billion.
WPP said that on a like-for-like basis advertising and media investment management, branding and identity, and healthcare and specialist communications were the strongest sectors. However, its data investment management sector slowed from the final quarter of 2013.
The company said that 2014 had started strongly, similar to the final quarter of 2013. Operating profit was above budget and ahead of the previous year, WPP said, and gross margin or net sales margin is growing in line with its full year target.
WPP cited concerns over the accelerated tensions between China and Japan over the disputed Diaoyu/Senkaku Islands, and the burgeoning crisis in Ukraine. With these issues heightening other macroeconomic concerns, clients remain unwilling to take further risks, WPP said.
As a result, WPP expects 2014 to be similar to 2013, with slightly increased client confidence buoyed by stronger economic growth forecasts and events such as the Winter Olympics, the FIFA World Cup, and the mid-term elections in the US.
"All in all, 2014 looks likely to be another demanding year, as a strong United Kingdom pound and weak faster growth market currencies continue to take their toll on our reported results, but if budgets and quarter one preliminary revised forecasts are met, 2014 will be another strong year," the company said in its statement.
For 2014, WPP said it will be looking to beat competitors on revenue and gross margin or net sales growth.
In the longer term, WPP is looking to improve its staff costs to gross margin or net sales ratio by 0.2 percentage point per year, and see headline diluted earnings per share growth of 15% to 15% per year.
Shares in WPP were trading up 0.6% at 1,282.00 pence shortly after market open Friday.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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