Ciesco: WPP wins 2014 results race but continental Europe still a problem for all networks

WPP strengthened its position as the world’s largest marketing services company according to a new analysis by boutique corporate advisory firm Ciesco. The group experienced organic revenue growth of 8.2 per cent in 2014, with total revenue of £11.5bn ($19bn). Omnicom’s organic growth was 5.7 per cent, with revenues of $15.3bn. Publicis experienced weak organic growth with two per cent and revenue of €7.3bn ($9.6bn). IPG’s organic growth was 5.5 per cent, with revenue of $7.5bn.
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WPP announced a headline profit before tax of £1.5bn ($2.5bn), the highest in its history. Headline EBITDA was £1.9bn ($3.1bn), with a margin of 16.6 per cent. Omnicom’s EBITDA increased 6.1 per cent to $2.2bn, with a margin of 14.6 per cent. Publicis’ EBITDA increased 6.5 per cent to €1.2bn ($1.7bn), and is still ahead of its peers with a strong 18 per cent margin. IPG’s EBITDA was up 25.5 per cent to $1bn, but their margin is still lagging at 13.3 per cent, despite a strong year for McCann Worldgroup, who recently published a number of new client wins.

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The UK remains a robust market for most of the four largest players, with WPP reporting £1.6bn ($2.7bn) revenue and 12.9 per cent organic growth in the region, Publicis being the only one of the four being underweight in the UK. IPG experienced very strong organic growth in the LATAM region, but underperformed in the US given its size in the market.

Continental Europe was a drag on all four holding companies in 2014. Most of the major networks are struggling with the shrinking of some of their fragmented Continental European markets.

Organic growth by region* (defined as year-on-year increase/decrease in revenue from the prior period, excluding FX and net acquisitions)

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*Europe excludes Russia and Turkey
BRIC: Brazil, Russia, India & China
ME: Middle East
MISSAT: Mexico, Indonesia, Singapore, South Africa & Turkey

Ciesco is a boutique corporate finance advisory firm, specialising in the digital, media, marketing and technology sectors. It advises clients on mergers and acquisitions, business strategy and executive search.

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2 comments

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    Ciesco’s analysis is flawed.
    Ciesco is not comparing like for like when comparing WPP’s organic revenue growth to, for example, the organic revenue growth of Publicis.
    The true comparison should be net sales for WPP, which shows organic growth of 3.2%, vs 5.7% for Omnicom and 2% for Publicis.
    This can be clarified by checking the margins that the network companies report. The WPP margin is calculated using net sales and arriving at a margin of 16.7%.

  2. Avatar

    Steve, thank you for your comment. The analysis compares the reported top-line revenue and organic revenue growth for each of the four companies as reported in their 2014 preliminary accounts and investor presentations. WPP report both revenue and net sales figures (the difference being pass-through costs), whereas the other groups simply show one revenue figure. For consistency purposes, we have calculated EBITDA margins on revenue rather than net sales for WPP. WPP’s own investor presentation for 2014 shows holding company group comparables also on the revenue level.