WPP buoyed by strong growth in UK and emerging markets

Advertising and media group WPP reiterated its long-term targets on Friday after saying that trading patterns in the first three months of the year were similar to the final quarter of 2012.

Revenues grew by 5.9% to £2.53bn in the quarter ended March 31st, up just 2.1% on a like-for-like basis as growth from acquisitions was partly offset by a weaker sterling. Revenues in constant currency were up 5.1% year-on-year.

"The pattern of revenue growth in 2013 has started similarly to the final quarter of 2012, with constant currency growth showing continuing improvement across all sectors, except public relations and public affairs and across all geographies."

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WPP, led by frontman Sir Martin Sorrell, said that the slowing growth in the mature markets in the US and Western Continental Europe seen in 2012 also continued into 2013. However, strong growth was registered in the UK, as well as Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe (AP, LA, AME and CEE).

The UK, which accounts for 12.5% of group revenues, grew by 11.9% in the first quarter, while AP, LA, AME and CEE, which together account for 29.1% of revenues, expanded by 8.1%.

Profits and operating margins in the first quarter were said to be ahead of budget and well ahead off last year.

"We are in the process of reviewing our quarter one preliminary revised forecasts, but early indications are that full year like-for-like revenue growth will be above budget, with a stronger second half."

However, the WPP's outlook had a cautious undertone similar to that seen in its full-year results in March, though the company did not "slightly increased client confidence".

The firm said: "Concerns globally about the grey swans including the Eurozone crisis, the Middle East, a Chinese or BRICs hard or soft landing and, perhaps, most importantly, dealing with the US deficit and a record $16tn of debt, continue to make clients reluctant to take further risks, despite stronger balances sheets."

Nevertheless, the company continues to target revenue and margin growth above the industry average (including acquisitions) in the long term, as well as annual profit before tax growth of 10-15%.