Cohn & Wolfe leads way as WPP grows PR revenues across 2016 despite Q4 dip

UK revenue at WPP's PR firms was "down significantly" in Q4 2016, also falling in North America by more than two per cent in the same period - but revenue across the year grew at a faster pace than in the year before.

The world's largest marcoms holding company's preliminary results for the year to 31 December 2016 were released this morning, with the announcement hailing "another record year, with strong currency tailwinds, particularly in the second half".

They show group-wide billings of £55.3bn ($67.6bn), which is a 16 per cent rise on 2015's £47.6bn. However, this growth percentage shrinks to 5.5 per cent when adjustments are made for currency fluctations, and 3.3 per cent when only considering like-for-like revenues, excluding businesses acquired during the year.

Revenue was up a currency-adjusted 7.2 per cent to £14.4bn, and headline profit before tax registered at just under £2bn, up 22.4 per cent on last year, or 9.1 per cent in constant currency.

Of WPP PR firms, which include Cohn & Wolfe, Ogilvy PR, Burson-Marsteller and H+K Strategies, the company said: "In constant currencies, the group’s public relations and public affairs businesses continued the growth shown earlier in the year, with a stronger second half, but slower fourth quarter, primarily the result of stronger comparatives in the specialist public relations businesses in the final quarter of 2015."

In 2015, WPP's PR firms had grown their revenues by six per cent at constant currencies - and Cohn & Wolfe and Ogilvy PR were its top performers.

For 2016, the figure was "almost seven per cent", despite having been just 2.5 per cent in Q4, when like-for-like net sales decreased 0.7 per cent. For Q4, North America was "down over two per cent", and the UK was "down significantly, as a result of lower M&A activity... compared with 2015". UK revenues across all of the group's businesses followed a similar pattern.

Of individual PR brands' performance across the year, the results said: "Cohn & Wolfe performed particularly well. Ogilvy Public Relations and H+K Strategies also improved, with Burson-Marsteller less buoyant. An improving top line and good control of costs resulted in the operating margin improving by 1.1 margin points to 16.7 per cent and by 0.8 margin points in constant currency."

Cohn & Wolfe global CEO Donna Imperato said the agency grew globally by 12 per cent across 2016, its third consecutive year of double digit growth.

Imperato also said the firm was "particularly proud" that 70 per cent of its clients work with it on integrated briefs. She said this was a "testament to our ongoing evolution to deliver fully integrated communications solutions for clients across every industry in every market. We are already experiencing great momentum in Q1 and looking ahead to another extraordinary year," she said.

WPP announced last month that it will consolidating its Ogilvy brands into a single profit and loss account.

Across the group as a whole, revenue growth was strong "in all sectors, except data investment management, with particularly strong growth in advertising and media investment management and branding and identity, healthcare and specialist communications".

The tables below show that PR and public affairs make up just under eight per cent of WPP's business, and that they have a slightly lower profit margin than its much bigger ad and media division.

The margin's across WPP's PR business of 16.7 per cent compare very favourably to an average of 12.4 per cent across the UK's 40 biggest PR agencies, according to a report last year - although the report's author Kingston Smith told PRWeek that the its way of calculating margins varies fractionally from WPP's.

The results statement concludes on a long-termist note, saying: "The business we are in demands that we be quick on our feet; quick to take advantage of new opportunities; quick to respond to new challenges; quick to understand new popular attitudes. 2016, more than any we can remember, was a year that made countless such demands.

"But there is another skill, at least as important, that gets less recognition. It is less newsworthy, rarely draws attention to itself and is perhaps closer to wisdom. It is the ability to create, recognise, refresh and maintain those long-term brand values that provide most big companies with their most reliable profit streams. At a time when all external pressures seem to call for instant, short-term responses, an understanding of the value of confidence, consistency and continuity has never itself been more valuable."

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