Advertising and media giant WPP (LON:WPP, NASDAQ:WPPGY) has made a flying start to 2016 after a record-breaking performance in 2015.
In January, like-for-like revenue was up 4.2% year-on-year, ahead of budget, with like-for-like net sales, up 2.3%, also ahead of budget and against strong comparatives, WPP said.
All regions and sectors, except data investment management and public relations and public affairs, showed revenue and net sales growth, with advertising and media investment management, direct, digital and interactive and the specialist communications businesses, the stand-out performers.
For the whole of 2015, reported revenue was up 6.1% from at year earlier at £12.24bn. Profit before tax was up 2.8%, or 7.3% in constant currency terms, at £1.25bn.
The full-year dividend pay-out has been hiked by 17% to 44.69p.
Net debt at the end of 2015 had risen £936mln to £3.21bn.
WPP's founder and chief executive, Martin Sorrell, noted the group's performance slowed in the second half of 2015 but said it still put in a creditable performance.
Nevertheless, in a reference to the 'Mad Men' television series, he warned against “Don Draperish general industry optimism” in the industry, which he said seems misplaced.
Tepid economic growth, low or no inflation and the consequent lack of pricing power all encourage a focus on cutting costs to reach profit targets, rather than revenue growth, Sorrell opined.
“In addition, there seem to be little, if any, reasons for an upside breakout from the current levels of real or nominal GDP [gross domestic product] growth, which remain stuck around 3% to 4% and below the pre-Lehman trend rate, which by definition was unsustainable.
“In fact, in recent months, whilst real GDP forecasts have remained steady, nominal forecasts have deteriorated significantly to under 3%, due to the strength of the US dollar, although the same pundits expect inflation (somewhat optimistically?) to increase in the coming years. In this respect, oil price reductions, the Iranian nuclear "armistice" and the international currency wars have not been helpful black or grey swans,” he added.
“The pattern for 2016 looks very similar to 2015, but with the bonus of the maxi-quadrennial events of the visually-stunning Rio Olympics, the UEFA Euro Football Championships and, of course, the United States Presidential Election to boost marketing investments, as usual by up to 1% or so, above advertising as a proportion of GDP,” Sorrell said.
In the geopolitical arena, Sorrell said the prospect of a British exit from the European Union was top of the agenda.
In the USA, Sorrell said in an interview with business channel CNBC that he was more convinced than ever Hillary Clinton would be the next president.
WPP's shares were outperforming the market early doors, rising 1.8% to 1,566p.