WPP reports continuing sales slump, but rewards top execs

03 June 2009

WPP Plc, the world's largest advertising company, reported lower sales for the first four months of 2009 and said it is cutting jobs to safeguard profitability. At the same time, its shareholders approved a controversial proposal that would give chief executive Sir Martin Sorrell and other top executives big rewards for outperforming rivals amid the advertising downturn.

Sales excluding acquisitions and currency swings declined 6.7 per cent from a year earlier, the company said in an e-mailed statement on Tuesday. Business was worse in April compared with the first quarter, it said.

''For the remainder of 2009 the short-term focus will continue to be on balancing staff costs and headcount, against the fall in revenues,'' the company said. The number of employees dropped by 4,300, or 3.7 per cent, in the first four months. Over half the people who left did so voluntarily, the London-based WPP said.

In April, WPP reported that like-for-like revenues in the first quarter were down 5.8 per cent. But ''there will be recovery of sorts in early 2010,'' and ''signs of recovery will come in Asia first'', Sorrell said following the shareholder meeting today in Dublin.

Sales declined in the US, the UK and continental Europe in the first four months of 2009, while revenue increased in eastern continental Europe, Latin America and Africa. The company said revenue was less than budgeted for the four months, while headline operating profit and headline operating margin exceeded the budget.

''Six months ago everyone expected an Armageddon and people now see some relief that the world didn't fall apart,'' Sorrell said.