Sorrell sounds optimistic note as WPP’s sales climb 9% in UK

The world’s largest agency, led by Sir Martin Sorrell, said UK revenues showed “significant improvement”, up 8.9 per cent in the three months to the end of September, compared with a 6.6 per cent rise in the previous quarter.

WPP, which is seen as a bellwether for the wider global economy, said like-for-like worldwide revenues were up 4.7 per cent in its third quarter as companies continued to invest in marketing their brands.

The rise in global revenues was slightly lower than in the previous quarter and the group downgraded its full-year revenues growth target to 5 per cent from about 6 per cent, although the reduction had been expected.

Total revenues rose 9 per cent to £2.5 billion, underpinned by double-digit growth in Asia Pacific, Latin America, Africa, the Middle East and Europe. The company took on more staff in the quarter, including in the UK.

Headline operating margins improved in the third quarter. WPP said the margin improvement “augurs well for enhanced profitability, despite more difficult economic headwinds and industry comparatives”.

Sorrell said it was “likely that European politicians will just about muddle through the current eurozone crisis” but tougher times lie ahead in late 2012 and into 2013 when the next US president deals with the deficit in the world’s biggest economy.

The company believes its prospects for 2012 “do not look dire” and said it will benefit from the media spending around the US presidential election, the London Olympics and the European football championships.

The company predicted an “L-shaped recovery”, with “a long slog” in western markets in particular.

WPP owns agencies including Ogilvy & Mather and J Walter Thompson, and provides a range of services including media planning and buying, market research, branding and public relations.

It is highly dependent on consumer confidence and companies’ spending on adverts and its forecasts are watched closely.

Earlier this year, WPP said its sales and profits had returned to levels seen before the 2008 crash of Lehman Brothers. Advertising spending was hammered in the subsequent recession.

Paul Gooden, an analyst at Royal Bank of Scotland, which has a “buy” rating and 800p price target on the shares, said the reduction in growth targets had been largely expected and added that he didn’t expect any change in the company’s full-year figure forecasts.

Rival Publicis posted a 6.4 per cent third-quarter sales rise earlier this month but also said it expected a slowdown in the fourth quarter.

Shares in WPP closed up 11p at 688p.