Reuters Summit-WPP companies raise 2011 growth forecast
(For other news from the Reuters Global Media Summit, click here)
* Has not seen an impact from Euro debt crisis
* "Highly likely" to raise the 2011 dividend rate
* Operating companies have raised 2011 forecasts
(Adds details, quotes)
By Kate Holton and Georgina Prodhan
LONDON, Nov 29 (Reuters) - The operating companies within WPP (WPP.L), the world's largest advertising group, have raised their 2011 growth forecasts, and Chief Executive Martin Sorrell believes the group can now also raise its dividend.
Speaking to the Reuters Global Media Summit, Sorrell said the group had not yet seen any impact from the euro zone debt crisis, although he said it had created "massive uncertainty".
"It's too early to predict," he said, when asked about any impact from the problems that have hit the euro zone in recent weeks. "We're seeing pretty good strength across the board."
Individual companies within the group had previously indicated that they expected to grow at between 3 and 4 percent next year.
"Actually, it's stronger than that. It's coming through stronger," Sorrell said, when asked if that was still the case.
WPP, which includes Ogilvy & Mather and Hill & Knowlton, has recovered from a severe downturn in advertising, helped by growth in the United States, China and a rebound in traditional advertising.
Sorrell said the company had grown by 4.5 percent in the year so far to the end of October and said in general he would be surprised if trading in November and December moved significantly from that rate.
"Most of our clients budget on a calendar year basis," he said. "We've seen sequential improvements until the end of October. October was over 8 percent."
Sorrell said the improvement in trading and the fact the group had improved its debt to earnings ratio meant it could now also start thinking about increasing the dividend for 2011.
Sorrell said it was "highly likely" that the group would "do another 15 percent" dividend growth rate in the second half of this year and then look to raise it in 2011.
"I think we'll probably stimulate the dividend rate," he said. "Our dividend pay-out coverage is about three times. Some people think we could go down to two times. I'm not sure; I think that may be going a bit far, but somewhere between the two."
Sorrell said prior to the acquisition of the market research group TNS, WPP had achieved an increase in the dividend of 20 percent.
"I think it is highly likely that we'll do something with increasing the dividend growth rate," he said.
(Reporting by Kate Holton and Georgina Prodhan; Editing by Will Waterman)
((kate.holton@reuters.com; +44 207 542 8560; Reuters Messaging:kate.holton.reuters.com@reuters.net))
((Click here to see Reuters MediaFile blog)) Keywords: MEDIA SUMMIT/WPP
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