WPP beats expectations

WPP Group, the world's second largest advertising group, has posted full-year profits beyond market expectations.

Revealing its full-year results for 2004, the group posted a 15 per cent increase in profits to £546m ($1.04bn), beating analyst expectations of £532m. Revenues were also up at £4.3bn.

WPP also pulled in £3.8bn in new billings throughout 2004 including clients such as Unilever, Nestle and Samsung.

The group's acquisition of Grey Global also boosted the firm, pushing it nearer to its advertising rival and the world's largest advertising firm, Omnicom.

WPP chief executive, Sir Martin Sorrell said: ì2004 reflected 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.

ì2004 also marked a switch in client focus to top-line growth, as corporate profitability, margins and liquidity improved significantly, following cost management in the recession of 2001-2003.î

Remaining cautious, Sorrell added: ìI think the one area of concern is what's going to happen in the US economy, and whether running twin deficits, the commodity price inflation and the weak dollar will affect growth.î

Despite this, WPP said that it hopes to increase its operating margins from 14.1 per cent in 2004 to 14.3 per cent in 2005 and 14.8 per cent in 2006.

However, Investec analyst, Kingsley Wilson, remained upbeat. He told Reuters: ìThe outlook for 2005 is broadly encouraging. They've [WWP Group] long since warned there would be a post-US presidential election slowdown, but it looks like their other territories might come to the rescue.î