WPP sees ad slump past worst

WPP, which has the likes of Unilever, Vodafone, HSBC and Ford as clients, reported 2009 organic revenues down 8.1 percent Friday, at the lower end of a range of forecasts, but showed signs its operating margins were improving after it cut jobs.

Chief Executive Martin Sorrell told Reuters the group had recovered in 2009 after initially being slow to cut head count. He said he now expected 2010 like-for-like revenues to be flat, with margins up to 12.7 percent from 11.7 percent in 2009.

It expects a slightly stronger second half.

Analysts said the like-for-like revenue figure, a closely watched industry metric which strips out foreign currency impact and recent acquisitions, was slightly light but said the firm had done well to manage its operating margins in such tough conditions.

Its margin for the year was 11.7 percent and 15.4 percent in the second half.

UBS analysts said they did not expect the figures to result in any meaningful underlying upgrades.

"Given recent share price moves and high investor expectations for an improving outlook, guidance only in line could disappoint," they said.

Shares in the group were down 1.28 percent in early morning trading.

WPP reported 2009 like-for-like revenues down 8.1 percent and down 7 percent in the fourth quarter, compared to a Reuters poll forecasting a 2009 drop of 7.7 percent and down 6.3 percent in the fourth quarter.

French advertising group Publicis said in February it believed the worst of the economic downturn was over and said it aimed to return to sales growth this year and achieve stable margins.

Its forecast for flat margins however disappointed the market.

Publicis reported a fourth-quarter organic sales decline of 5.4 percent while the same metric fell 6.3 percent at Omnicom.

Sorrell told Reuters this week he had seen a "significant" change in trading in November and said the firm had now hit a stabilisation phase.

"Like-for-like revenues were almost the same in January 2010, against January 2009, an encouraging return to stability, a trend first indicated in November 2009," the company said on Friday.

"Although this return to stability seems widespread both geographically and functionally, there is no marked growth as yet, even against weak comparatives."

(Reporting by Kate Holton; Editing by Hans Peters)