WPP outlook is gloomy

ADVERTISING giant WPP expects its sales in 2002 to be flat and the global advertising industry to show few signs of recovery.

The world's second largest advertising group also hinted that a 9% reduction in its workforce to 51,000 in recent months could be extended if the group fails to meet its targets.

Investors were told that acquisitions were bedding in, helping to lift operating profit 33% to £506m on revenues up 35% to £4.2bn last year. The annual dividend rises 20% to 4.5p.

'A V-shaped recovery seems unlikely despite the level of stock market valuations,' the group said. 'What seems most likely is a bath-shaped or saucer-shaped recovery where the upturn is gradual.'

Chief executive Sir Martin Sorrell said the industry had been brutalised by a decline as bad as anything in the recession of the early 1990s.

For 2002 WPP expects a 3% like-for-like decline in revenues from advertising and media management, offset by improved sales from marketing services.

Comparable revenues dipped 3% last year, but the acquisition of Young & Rubicam in October 2000 boosted group figures. After a £71m write-down against minority stakes in technology ventures, pre-tax profits rose by 12.4% to £411m.