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UPDATE 3-WPP raises forecasts after U.S. turnaround
April 30, 2010 / 6:40 AM / 8 years ago

UPDATE 3-WPP raises forecasts after U.S. turnaround

 * Q1 like-for-like revenues flat, up 1 pct in March
 * Says full-yr forecasts being revised up
 * Seen biggest turnaround in U.S.
 * Shares up 2 pct on index up 0.2 pct   (Adds reaction, further details)
 By Kate Holton
 LONDON, April 30 (Reuters) - WPP (WPP.L), the world's largest ad firm by sales, raised its key like-for-like full-year revenue forecast on Friday to 2 percent growth from a previous prediction of flat after a strong turnaround in the United States.
 Adding to the signs of a global ad recovery following strong updates from rivals last week, WPP said the key organic sales figure had been flat in the first quarter, including March which was up 1 percent, the first monthly revenue growth in 14 months.
 Shares in the firm, whose clients include Vodafone, Ford and Unilever, rose 2 percent at 0950 GMT, ahead of the FTSE 100 .FTSE which was down 0.2 percent.
 WPP said it had seen a change in client attitudes, with the most marked turnaround in the United States, and Chief Executive Martin Sorrell told Reuters the forecasts could be conservative.
 "This is what our businesses are forecasting, without us having gone through them and usually when we do go through them they tend to be on the conservative side," he said in a phone interview from Hong Kong.
 "To make the point, in the first quarter we were three percent ahead of where we were budgeting."
 Analysts were expecting an organic sales figure of 0.9 percent, according to a Reuters poll, which had a range of 0 to 2.1 percent.
 "Overall, we would expect no significant changes to full-year numbers today though the limited increase to guidance and underperformance in Q1 vs. peers may dampen hopes of robust earnings upgrades," UBS said in a note to clients.
 Analysts had originally expected WPP's organic sales to be slightly down for the first quarter, after they fell more than 8 percent in 2009, but they revised their numbers after rivals Omnicom (OMC.N) and Publicis (PUBP.PA) posted improved trading.
 French rival Publicis beat forecasts for its first-quarter sales last week, when it reported organic growth of 3.1 percent. [ID:nLDE63L047]
 Omnicom Group (OMC.N), which reported first quarter organic revenue up 2.1 percent, said it had seen a stronger performance in the United States, Africa and the Middle East. [ID:nN20256112]
 The performance was boosted by the U.S. market, which had first-quarter growth of 4 percent on a constant currency basis, while Britain was positive and mainland China and India showed combined growth of over 5 percent. 
 "It's a case of America biting back," Sorrell told Reuters Insider TV.
  For the Reuters Insider segment on WPP please click on . ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Western Continental Europe was described as the most challenged region.
 Of the different types of business, WPP said public relations, public affairs and specialist communications such as direct and digital had recovered, while advertising and media investment management was still down. 
 "The group has managed expectations well and therefore flat growth will be no surprise, despite seeing more positive growth from peers that have already reported," Citi analysts said.
 "However, the questions will be focused on why digital growth and growth in the faster growing markets lags peers."
 The group said margins should improve "in line with, if not better than, the group's margin target of 1.0 margin pound improvement".  (Reporting by Kate Holton; Editing by David Cowell and Rupert Winchester)     

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