MAM
WPP first quarter revenues up 16%
MUMBAI: WPP’s acquisition of Grey Global has resulted in a sliver lining if one goes by the revenues that former has garnered post the take over. WPP’s revenues have seen a 16 per cent rise on the first quarter of 2005, which primarily reflecting strong organic growth and a first-time contribution from Grey from 7 March.
The impact of currency in the first quarter of 2005 was minimal. On a like-for-like basis, excluding acquisitions and currency fluctuations, revenues were up almost six per cent. This maintains the improvement in the organic growth rate of the last two quarters of 2004 and reflects the growing focus by clients on improving profitability through innovation and branding and top line growth, rather than by relying solely on cost cutting.
In all the regions that WPP has a presence in, a double digit revenue growth has been seen. In North America, revenues were up over 16 per cent; in Europe, the UK was up 12 per cent and Continental Europe up over 15 per cent.. Asia Pacific, Latin America, Africa and the Middle East was up 22 per cent.
By communications services sector, advertising and media investment management was up over 17 per cent, information, insight and consultancy up 19 per cent, public relations and public affairs up over 12 per cent, and branding and identity, healthcare and specialist communications up almost 15 per cent.
The net new business billings of GBP 875 million ($1.62 billion) were won during the first quarter. The Group has continued to benefit from consolidation trends in the industry, winning several large assignments from existing and new clients.
In the first quarter both profitability and operating margin were ahead of budget. Full year margin forecasts are in line with the Group’s revised combined margin target for 2005, including Grey, of 14.3 per cent.
Also, WPP’s operating companies continued to improve productivity. On a pro-forma basis, the number of people in the Group (excluding associates) was up 3.8 per cent as of 31 March 2005 to 71,097, as compared to the previous year. In Q1 2005, average headcount on a like-for-like basis was up 5.2 per cent to 64,368, compared with Q1 2004.
Balance Sheet and Cash Flow
WPP has continues to implement its strategy of using free cash flow to enhance share owner value through a judicious combination of capital expenditure, acquisitions and share cancellations, whilst ensuring that these expenditures are covered by free cash flow.
Average net debt in Q1 2005 was down GBP 240 million to GBP 586 million, compared to GBP 826 million in 2004. The current net debt figure compares with a market capitalisation of approximately GBP 7.5 billion. Net debt at 31 March 2005 was GBP 938 million compared to GBP 825 million in 2004 — an increase of GBP 113 million, reflecting a GBP 384 million gross cash payment for Grey.
In the twelve months to 31 March 2005, the Group’s free cash flow was GBP 572 million. Over the same period, the Group’s capital expenditure, acquisitions and share cancellations were GBP 646 million (including a GBP 384 million gross cash payment for Grey).
In the first quarter of 2005, in addition to the completion of the acquisition of Grey, the Group made acquisitions or increased equity interests in advertising and media investment management in the United Kingdom, Denmark and Argentina; in information, insight and consultancy in Hong Kong; in public relations and public affairs in Denmark; in healthcare in the United States, Netherlands and Switzerland; and in direct, Internet and interactive in the United States.
In Q1 2005, 3,367,000 ordinary shares were purchased, at an average price of GBP 6.17 per share and total cost of GBP 20.8 million. 2,250,000 of these shares were cancelled. The company’s objective remains to repurchase up to two per cent annually of its share base in the open market at an approximate cost of GBP 150 million, when market conditions are appropriate.
WPP will also be looking at focusing on its key objectives of improving operating profits by 10 per cent to 15 per cent per annum; improving operating margins by half to one margin point per annum; improving staff cost to revenue ratios by 0.6 margin points per annum; growing revenue faster than industry averages; improving our creative reputation and stimulating co-operation among Group companies.
WPP head honcho Sir Martin Sorrell was quoted in a media report as saying, “The continually increasing cost in network television, the fragmentation of media, and the development of new technologies are all moving the market toward direct, interactive and Internet.”
AD Agencies
Tribes and Omnicom Media win Gold for HSBC Living Hexagon at ET Awards
Kinetic OOH installation turns HSBC’s iconic logo into a living landmark
MUMBAI: Tribes Communication and Omnicom Media have secured a Gold win at the ET Design & Creativity Awards for their innovative out-of-home installation, The Living Hexagon, created for HSBC.
Awarded in the Most Creative Traditional OOH category, the project reimagines one of the world’s most recognisable banking symbols into a dynamic, ever-evolving structure. Designed for HSBC’s International Financial Services Centre presence, the installation was conceived to do more than simply grab attention. It aimed to seamlessly blend into the fast-growing ecosystem of GIFT City.
At the heart of the idea is HSBC’s iconic hexagon, typically associated with precision and consistency. Tribes transformed this static identity into a kinetic structure that responds to natural elements such as wind and light, creating a sense of continuous motion. The result is a visual experience that shifts throughout the day, echoing themes of adaptability and momentum.
Constructed using modular triangular units arranged along a precise geometric axis, the installation moves in synchrony, giving the illusion of a fluid, living form. While the structure evolves with its surroundings, it retains the unmistakable identity of the HSBC brand, striking a balance between innovation and familiarity.
Strategically placed at a key entry point into GIFT City, the installation functions as both a landmark and a statement. It reflects the pace and dynamism of global finance while embedding the brand into the city’s architectural narrative.
With this win, Tribes Communication and Omnicom Media underline the growing role of experiential and design-led thinking in traditional media, proving that even the most established brand assets can find new life when reimagined with creativity and context.
