‘Less worse’ turns to ‘stability’ – WPP reports 2009 results

At the mid-year point WPP reported insight sales down 10%, however the second half of the year brought “sequential quarterly improvements… with a marked improvement in the final quarter as clients appeared to return to more stable spending patterns,” the company said.

It added: “November and December showed the lowest consumer insight monthly revenue declines of 2009”.

Revenue for the insight division – which houses the Kantar, TNS-RI, Millward Brown and Lightspeed Research businesses – came in at £2.3bn, up from £1.3bn thanks to the acquisition of TNS in November 2008.

Headline profit before tax and other adjustments (PBIT) was £196.9m, or 8.6% of revenue. This compares unfavourably to last year’s margin of 11.3%, with the decrease attributed to costs associated with the integration of TNS with Research International and Kantar. On a like-for-like basis headline PBIT margin fell 7.7%, less than the like-for-like revenue decline, reflecting efforts taken to reduce costs.

A big part of WPP’s cost saving initiatives has been headcount reductions – coming as a mix of redundancies and general staff attrition. On a like-for-like basis, year-end group headcount was 98,759, 12% lower than in 2008. Its unclear to what extent the insight division was affected by these cuts. There have only been confirmed reports of redundancies at TNS Infratest in Germany and of unpaid leave and redundancies at TNS Custom UK.

At the group level, WPP said adjustments made to its cost base helped it achieve the same pro-forma operating margins in the second half of 2009, as compared to the same period in 2008. Group reported revenue was up 16.1% to £8.7bn, down 8.1% on a like-for-like basis.

Summarising the group’s performance in 2009, CEO Martin Sorrell said: “We seem to have moved from staring into the abyss post the Lehman Brothers crisis, to a ‘less worse’ phase in the second half of 2009 and a stabilisation phase towards the end of 2009 and the beginning of 2010.”