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Ireland-based advertising titan WPP Group plc (WPPGY - Analyst Report) reported its third quarter 2012 (ended September 30, 2012) trading results on October 25.

The company reported revenue of £2,496 million ($3,943 million) in the third quarter of 2012, reflecting a 1.6% year-over-year increase (or a 4.8% increase on a constant currency basis). The 1.6% year-over-year growth comprises a 1.9% organic growth, 2.9% growth from acquisitions and a negative 3.2% from currency translation.

From a geographical perspective (on a constant currency basis), WPP Group experienced a noticeable recovery in North America with revenue of £885 million ($1,398 million), reflecting an increase of 4.0% year over year. Revenue in the United Kingdom grew 8.9% to £311 million ($491 million), while revenue from the Western Continental Europe registered a slight 0.5% increase to £537 million ($848 million) and from Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe revenue soared 7.4% to £763 million ($1,205 million).

Revenue from Public Relations and Public Affairs grew 3.3% year over year on a constant currency basis to £227 million ($359 million). Branding & identity, healthcare and specialist communications witnessed a revenue increase of 10.6% to £679 million ($1,073 million), while revenue from advertising and media investment management increased 2.2% to £999 million ($1,578 million) while revenue from consumer insight soared 3.5% to £591 million ($934 million).

Net new business amounting to approximately £1,415 million (US$2,235 million) was won during the third quarter.

Exiting the third quarter 2012, WPP Group’s net debt was £3,556 million (US$5,749 million) versus £2,861 million ($4,468.2 million) in the previous year.        

Management apprehends continued weakness in the fourth quarter and expects organic revenue growth to fall within the 2.5%-3.0% range. Operating margin is expected to be 14.8%.

WPP Group is based in Dublin, Ireland, and together with its subsidiaries provides advertising and communications services worldwide. The Group faces competition from its peers like Interpublic Group of Companies Inc. (IPG - Analyst Report), Omnicom Group Inc. (OMC - Analyst Report), and Publicis Groupe SA (PUBGY.PK).
The current Zacks Consensus EPS Estimates for WPP plc are $5.69 and $6.24 for years 2012 and 2013, respectively. The estimates represent a year-over-year growth of 5.8% for 2012 and 6.2% for 2013.

We currently maintain a Neutral recommendation on the company.

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