Advertising demand in the UK gives a lift to WPP

The world’s biggest advertising and marketing group said underlying UK sales bucked the wider market to rise 3.7 per cent in the first three months of the year. They soared almost 12 per cent to £318m once acquisitions are included.

That helped lift the group’s like-for-like sales 2.1 per cent higher, in line with City targets. Undisclosed first-quarter profits beat company forecasts and were “well ahead” of last year.

The group’s expectation-busting performance in the UK follows Thursday’s surprisingly strong GDP figures, which showed Britain’s economy grew by 0.3 per cent in the first quarter.

Analysts said WPP’s strong trading could indicate developed markets are recovering more strongly than expected.

Hargreaves Lansdown stockbrokers said: “The firm could be argued to be something of an economic barometer, in which case there may be stronger signs of recovery in the more developed economies than the current thinking suggests.”

Digital, interactive and media investment sales also grew strongly in the UK, but consumer insight, branding and healthcare communications sales slid. UK gross margins grew 4.9 per cent during the quarter.

WPP, headed by chief executive Sir Martin Sorrell, cut 405 jobs during the quarter to leave it with about 115,800 staff around the globe, which it said reflected “cautious hiring”.

Including acquisitions, group sales increased 5.1 per cent to £2.5bn during the quarter.

The group said its strong quarter suggests full-year sales will beat forecasts. But it added that clients remain wary over concerns about the eurozone crisis, the Middle East and slowing Chinese growth.

WPP said: “Both consumers and corporates are likely to remain cautious and risk averse, but corporates should continue to invest in capacity and brands in fast growth markets, and in slow growth markets invest in brands to maintain market share, as they squeeze capacity.”

The group is more optimistic about 2014, when it expects a boost from the World Cup, the Winter Olympics and elections in Russia and the US.

WPP subsidiaries Kinetic, Mediacom and TNS have offices in Harrogate and Leeds.