China sales growth helps push advertising giant's revenues

   Date:2007/06/27     Source:

WPP.jpg

WPP Group Plc, the world's second-biggest advertising company, said yesterday that revenue rose 5.2 percent in the first five months of the year, indicating accelerating sales expansion in the second quarter.

Growth in the first five months, excluding the effects of acquisitions and currency swings, compares with 4.3 percent in the first quarter. The company reported the figure at an annual shareholders' meeting in London.

WPP has been making purchases in faster-growing regions including China and India to counter slower growth in its traditional markets, according to Bloomberg News. The advertising company said its sales may climb 20 percent this year in China, making the nation WPP's third-biggest market earlier than it previously forecast.

"Asia Pacific, one of our strongest growing regions, showed continued strength, with like-for-like revenues up over nine percent," the company said in the statement. "The Middle East continued the strong growth seen in the first quarter and remains our fastest-growing area."

Revenue including acquisitions and currency effects added one percent in the first five months of 2007, WPP said. Sales rose 17 percent during the period from a year earlier.

Sales in China were 550 million pounds (US$1,100) last year and have been rising, Chief Executive Officer Martin Sorrell said last week.

Advertising companies are expanding in emerging markets to counter slower growth in their traditional territories. In addition to acquisitions in the US and Europe, WPP made purchases or increased its stakes in advertising and media investment management in Brazil, Colombia, Australia, China, India, Japan and Pakistan in the first five months of 2007.

The company's growth in China has outpaced previous forecasts by Sorrell, who said last year he expected the nation to be WPP's third-biggest market by the 2008 Beijing Olympics.

The Chinese ad market may overtake Japan to become the world's second biggest by the 2008 Games, behind the US, Sorrell said earlier this month. Ad sales in Japan this year are expected to fall 0.2 percent from 2006, said CTR Market Research.

WPP said last month that it agreed to buy New York-based 24/7 Real Media Inc for US$649 million, adding an online ad agency as clients shift spending to the Internet. Sorrell said the catalyst for the deal was Google Inc's US$3.1 billion agreement in April to buy Web-ad company DoubleClick Inc. Online advertising will exceed US$33 billion this year, more than eight percent of global ad spending, WPP said last month, citing estimates by its GroupM media investment unit.

Average net debt rose 80 million pounds to 1.19 billion in the first five months of the year, compared with 1.11 billion in 2006, at 2007 average exchange rates, WPP said.

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