British advertising giant, WPP, reported net sales growth of 2.9% in the third quarter, with revenues up 23.4% to £3.61bn ($4.4bn) – benefiting from the post-Brexit slump in the value of the pound sterling.
The company reported constant currency growth of 7.6%, 4.4% growth from acquisitions and 15.8% from currency. “The latter reflects the continuing weakness of the pound sterling against most currencies, especially during the third quarter, following the United Kingdom vote to exit the European Union,” WPP said in its Third Quarter Trading Update 2016.
Chief Executive Martin Sorrell was quoted by Reuters as saying that they were “false gains”.
“My view on sterling is it’s almost like the country’s stock price, and it has taken a 15-20 percent hit and I don’t think that’s good news,” he said.
Revenue analysis
| £ million | 2016 | ∆ reported | ∆ constant | ∆ LFL | Acquisitions | 2015 |
| First quarter | 3,076 | 10.5% | 9.0% | 5.1% | 3.9% | 2,783 |
| Second quarter | 3,460 | 13.2% | 8.8% | 3.5% | 5.3% | 3,056 |
| First half | 6,536 | 11.9% | 8.9% | 4.3% | 4.6% | 5,839 |
| Third quarter | 3,611 | 23.4% | 7.6% | 3.2% | 4.4% | 2,927 |
| First nine months | 10,147 | 15.8% | 8.5% | 3.9% | 4.6% | 8,766 |
Sorrell said the UK market was a “little bit softer, maybe reflecting some of the uncertainty around Brexit” in the third quarter.
He told the BBC: “In the third quarter we softened a bit in the UK … What it tells you is that uncertainty in the UK over Brexit and some of the other things that are going on round the world makes our clients a little bit nervous and hesitant to invest.
“That level of uncertainty makes our clients less willing to invest in capital investment, building plants and making investments and, in our own parochial case, investing in innovation for consumers and brand. Uncertainty is the enemy of growth.”
WPP is increasing focus on its four other big EU markets: Germany, France, Italy and Spain.
“We have upped our game in those four markets in the last three-to-four months post Brexit, and we will continue to,” Sorrell said.
‘Good performance’
“Given what’s happening in the environment, the slow growth, lack of inflation – with the exception of the UK with the devaluation of sterling – the focus on costs and the general level of uncertainty around the world, I think it’s a good performance,” he added.
WPP shares gained 3.5% to £17.70.