WPP’s financials disappoint markets – and where exactly is Sir Martin Sorrell’s company heading?

This is an updated version of an earlier story.

So did WPP have a good year or not in 2013?

Sales (billings) rose six per cent to £46bn, revenue was approximately £11bn and profts before tax and interests (the dreaded EBITDA) rose 8.5 per cent from £1.53bn to £1.66bn. However the company slightly under-performed analysts’ expectations, which is a bit of a surprise given how much effort it puts into steering them the right way. Organic growth was just three per cent and the company missed its margin increase target of 0.5 per cent, recording 0.3 per cent. In early London trading the shares fell five per cent.

North America was the strongest region with growth slowing in so-called emerging markets, the consistent focus of WPP’s efforts in recent years. The UK and Europe were OK.

imagesBBC Radio business reporter Simon Jack is an expert at winding up WPP boss Sir Martin Sorrell (left) and he got him going again this morning, introducing WPP as the second-largest marcoms company, which had Sorrell spluttering that WPP was still the biggest as the Omnicom/Publicis merger had yet to go through – and that there was no certainty it would. Chinese regulators are still looking at the issue although it would be a huge surprise if they throw a permanent spanner in the works.

For the rest of the (brief) interview Sorrell was at his most Pooterish (self-important), reeling off endless not very enlightening stats interspersed with his favourite phrase of the moment – ‘grey swans’ – which seems to mean unpredictable events like the Scottish referendum and the possibility of the UK withdrawing from the EU if David Cameron wins the next election and there’s the long-promised referendum on British membership.

WPP remains an acquisition-driven company, which is why its growth rate is not that spectacular. All these acquisitions (most of the recent ones have been quite small) need to be absorbed – and make more money than they have in the past – to keep WPP motoring.

The focus in the past year or so has been on technology companies and WPP announced yesterday that it was buying into Percolate, a US outfit that claims to have a ‘platform’ that manages content better than any of its rivals.

WPP Digital boss Mark Read says: “As the demand by marketers for content explodes with the growth of the social, mobile and video platforms such as Facebook, Twitter and YouTube, an integrated technology platform must become a more central part of the marketing process. What we see in Percolate is a platform that can help our clients and agencies create, manage and distribute content across these channels much more effectively.”

Which sounds jolly useful although ‘content’ cam mean just anything these days. Ads are content, presumably. It’s hard to work out where WPP sees this drive into technology ending up. Is it doing it to serve its clients better (and make more money from them) or is it trying to create a standalone technology operation – or both.

If the answer’s both, then WPP is looking increasingly like a conglomerate – a sort of marcoms GE – and some conglomerates get broken up as overall growth slows because the company is trying to do too much.

That’s not likely to happen with Sorrell in charge but it might if, for any reason, there was a change of leader. Advanced students of WPP can find the full results here.


  1. Funny how the vast majority of the of the companies the Poisoned Dwarf has bought over the years have disappeared (don’t get me started on Enfatico) Yet his very first one, “Wire & Plastic Products,” is still churning out wire and plastic products. As for “Grey Swans” what an apt description of WPP. David was only interested in “Trumpeter Swans.” Poor old sod must be spinning like a top under the Toufou turf. Is it time to dump my FIVE WPP shares?

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