WPP (WPP.L), the world’s biggest advertising company, raised its sales guidance again on Thursday and said that much better than expected third-quarter trading showed a structural change to its growth rate, sending its shares up 4%.
Advertising giants such as WPP and France’s Publicis (PUBP.PA) have been in the vanguard of the global corporate recovery from the coronavirus crisis as companies spend on new brand campaigns, digital advertising and e-commerce to tap renewed consumer spending.
Chief Executive Mark Read said that the strength of demand – driven by clients in the United States, Britain and Germany – compared with its performance before the pandemic showed that this was much more than a cyclical recovery.
“This gives us confidence that there’s momentum in the business,” he said.
WPP said its core metric, known as like-for-like revenue less pass-through costs, jumped 15.7% in the quarter, well ahead of forecasts of 9.5% and almost 7% up on its performance in the same quarter of pre-pandemic 2019.
The British group raised its full-year outlook for growth to a range of 11.5% to 12%, up from the 9-10% increase it had announced in August.
That many parts of the world, such as the Asia Pacific region and the Middle East and Africa, have not recovered yet, indicates that there will be further good growth in 2022, Read said.
Analysts at Citi said the trading update should increase the sense that WPP’s recovery is “not just cyclical but structural, creating a platform for a rerating”.
WPP said in August that it had returned to 2019 business levels a year ahead of plan as clients rushed to benefit from a global economic recovery from the pandemic.