WPP sets lower growth targets as shares dip 6%

Investors in WPP can expect more conservative revenue and sales targets set by the company as shares tumbled 6 per cent in early trading today.

Seen both as a bellwether of the global advertising industry and a strong indicator of the health of the wider global economy, the company can still look forward to future growth as it taps emerging market economies and continues to develop its digital proposition, The Share Centre believes.

The advertising giant revealed strong results in its annual accounts, published yesterday, but it has told investors its revenue and sales target for this year will only be 2 per cent.

WPP said January was a slow month sales-wise, with net sales growing a shy 1.2 per cent.

It said “given continued tepid economic growth and recent weaker comparative”, the budgets for this year have been set conservatively for both revenue and net sales.

The firm reported net sales growth of 3.1 per cent after winning £4.4bn of net new business.

Revenue was up 17.6 per cent at £14.39bn over the period, while pre-tax profit were at £1.89bn. Dividend for the year was up by 26.7 per cent at 56.6 pence.

Despite the sudden drop in its shares, The Share Centre investment research analyst Graham Spooner argues the new technology employed by the firm and the growth opportunities in emerging markets will continue to support the company.

He says: “WPP is the bellwether of the advertising industry and as such is widely regarded as a global economic barometer. The outlook comments released this morning will therefore be of great interest to investors.

“This is however, a company that offers a wide range of exposure to both digital media and global markets. New technology should help open up avenues for growth over the longer term, this is reflected in new media related business being WPP’s fastest growing area.

“The growing importance of emerging markets and digital media to the company looks set to continue, allied to improving dividends, earnings momentum and a steady flow of acquisitions. As a result, we continue to recommend WPP as a ‘buy’ for medium risk investors with a balanced portfolio.”