We don’t actually know which party WPP’s Sir Martin Sorrell will be voting for on May 6 but a glance at the headline points of the marcoms giant’s Q1 numbers shows the mayhem inflicted by currency swings.
Reported revenue is up 8.3 per cent at £2.783bn in sterling, down 1.1 per cent at $4.211bn in dollars and up 20.9 per cent at €3.753bn in euros reflecting volatile exchange rates. Constant currency revenue is up 7.4 per cent, like-for-like revenue up 5.2 per cent, constant currency net sales up five per cent and like-for-like net sales up 2.5 per cent.
So the last thing Sorrell (left) and WPP need is pressure on the UK’s currency because of fears that the UK will pull out of Europe in the referendum promised by both the Tories and UKIP. Labour’s Ed Miliband has said he opposes such a referendum, despite huge pressure on him to join the crowd.
Sorrell has already said publicly more than once that the proposed referendum is bad for business and there’s already evidence that it’s beginning to affect both sterling and the perception of the UK in the outside world. By comparison Miliband’s 50 per cent top rate of tax and the so-called ‘Mansion Tax’ look small beer.
Looking at the smaller print, advertising and media buying were, once more, the stand-out performers with the UK and US among the strongest regions. Sorrell’s beloved ‘data investment management,’ where most of 2014’s £300m or so of acquisition and share buy-back money has been spent, is still lagging these traditional activities. Sorrell hankers after Tesco’s Dunnhumby business, valued at anything up to £2bn. Shareholdwrs might not be so keen.
Also a worry is the company’s Q1 net new business which comes in at $1bn in the first quarter, compared to $1.275bn in the first quarter of 2014. This sounds a lot but WPP has missed out on numerous big accounts in both the US and UK over the past year, especially media. In the UK these include the UK government’s £140m business which went to Carat, Dixons and Sainsbury’s. WPP media agencies are currently pitching for Tesco in the UK and Coca-Cola in the US. They’d better win at least one of them.