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By Kate Holton
LONDON (Reuters) - WPP Plc (L:WPP), the advertising group run by high-profile executive Martin Sorrell, posted a slightly lower-than-expected 3 percent quarterly sales rise, reflecting growing concerns over geopolitical tensions and a slowdown in the global economy.
The British group, owner of the JWT and Ogilvy & Mather agencies, reiterated its full-year sales target however and outperformed its major rivals due to its broad geographical reach and strong presence in digital advertising.
"All in all, whilst clients may be more confident than they were in September 2008, they broadly remain unwilling to take further risks, particularly given multiple geopolitical flash points," the company said in a statement on Friday.
WPP, whose chief executive Sorrell is a frequent commentator on business issues such as taxation, posted a 3 percent rise in like-for-like net sales, slightly below the consensus of 3.3 percent and a first half rise of 4.1 percent.
Revenue - which the group distinguishes from net sales due to the way it books some income - was up 3.1 percent in sterling terms at 2.76 billion pounds and on a constant currency basis was up 10.6 percent.
WPP, which has more than 179,000 staff in 111 countries, said it expected a slowdown in the fourth quarter, after protests in Hong Kong, the spread of Ebola and the rise of Islamic State in Syria and Iraq knocked corporate confidence and deterred companies from spending freely.
WPP also faced tough comparatives in the third quarter and said it had seen some slowdown in North America and Britain, partly offset by a significant increase in western continental Europe.
ORGANIC SALES
The trading update, which caused WPP's shares to stall after a strong run in to the results, still put it ahead of its big four peers, among which it is the last to report on third-quarter performance.
On an organic sales basis, including the full impact of digital billings, WPP was up 7.6 percent, well ahead of French rival Publicis (PA:PUBP) on 1 percent and also ahead of Interpublic (N:IPG) on 6.3 percent and Omnicom (N:OMC) on 6.5 percent.
Analysts at Citi said the third-quarter growth was disappointing but said investors would be reassured by the confirmation of the full-year outlook.
"The implication of guidance is that the fourth-quarter won't necessarily be much better," they said. "In this context, valuation does not look stretched .... but nor does it look particularly compelling."
WPP shares trade on a multiple of 13.4 times forecast earnings, according to Reuters data, a discount to a peer average of 15.5 times.
WPP also said it had secured net new business of $1.66 billion in the third quarter and $5.75 billion in the first nine months, which it said ranked it first in net new business tables for the industry.
Its shares were flat at 1,210 pence by 0926 am London time, having bounced strongly from a 16-month low of 1,091p seen in mid October.
(Editing by Neil Maidment and David Holmes)