LONDON WPP, the world's largest advertising group, reported a much better than expected 7 percent rise in first quarter like-for-like revenue growth and said it had seen a surge in new client wins due to changes in the industry.
Martin Sorrell's group, which shocked the market in February when it lowered its 2014 profit guidance due to fierce competition, said it had enjoyed strong trading in North America and Britain and from its advertising and digital media divisions.
Profits, revenue margin and gross margin were all above budget, it said, and it reiterated its margin targets for the full-year.
The bullish trading update follows similarly upbeat statements from rivals Publicis and Omnicom, which are in the process of merging to overtake the British group as the world's largest ad firm, and IPG.
WPP has consistently won new clients from rivals since the two firms announced their intention to merge in July last year as the planned combination has resulted in conflicts of interests among their client bases.
WPP's net new business billings were up 57 percent in 2013 and they have won big clients in 2014, including Vodafone and Marks & Spencer.
As the last big agency to report, the 7 percent organic growth puts WPP at the top of the pile.
France's Publicis reported revenue growth on a comparable basis of 3.3 percent, helped by strong digital sales and an uptick in China and Europe. Omnicom posted sales on the same basis up 4.3 percent and IPG was up 6.6 percent, with the latter two benefiting from strong demand in their home U.S. market.
"In terms of the global ad agencies, first quarter growth demonstrated the expected acceleration and WPP led the pack; for us the discount to the global agency groups continues not to make too much sense," Jefferies said in a note to clients.
The only negative comments in the WPP statement resulted from the as-expected hit from the strong pound, with foreign exchange rates taking an 8.1 percent hit on revenues at the reported level.
The group also noted that its market research business had slowed in mainland China.
(Reporting by Kate Holton, Editing by Paul Sandle)