WPP beats forecasts despite adverse currency movements

25th Apr 2014 07:03

- Currency movements weigh on top line- Revenues still ahead of forecasts- Profits, margins ahead of budget- Outlook upbeatThe recent strength in sterling had a big impact on WPP's top line in the first quarter, limiting revenue growth to just 1.5 per cent, but results from the media and advertising giant still managed to come in ahead of analysts' forecasts.Reported revenues rose to £2.57bn in the first three months of 2014, up from £2.53bn the year before and ahead of the consensus forecast of £2.50bn.At constant currencies, sales would have grown by 9.6%, meaning that the negative impact of exchange rates was 8.1%. Revenues were actually up 8.7% in dollar terms and 4.5% higher in euros.WPP, led by frontman Sir Martin Sorrell, said that this reflected the strength of sterling, "particularly against many currencies in the faster growth markets, as seen in the final quarter of 2013".Like-for-like (LFL) revenues, which exclude the impact of acquisitions and currency fluctuations, were up 7% over the year. LFL sales increased across all WPP's major regions, with North America and the UK, up 9.3% an 10.7% respectively, bolstering growth.LFL sales also improved across the company's main divisions with its largest unit, Advertising and Media Investment Management (AMIM), registering growth of 13%, helping to offset more subdued performance elsewhere. AMIM accounted for 42% of group revenues during the quarter.Meanwhile, the company said that first-quarter profits and margins were ahead of budget."Following the group's record year in 2013, 2014 has started stronger and similar to the final quarter of 2013, with all geographies and sectors growing revenues and gross margin or net sales on both a constant currency and LFL basis," WPP said.It said that the pattern for 2014 looks similar to 2013, but with slightly increased client confidence, helped by stronger global economic growth forecasts and events such as the Winter Olympics, FIFA World Cup and mid-term Congressional Elections in the US.BC