WPP sales growth upsets investors

A tough UK advertising market has hit WPP's revenues

WPP, the world's second-biggest advertising group, has reported third-quarter sales growth of 4.6%, slightly behind market forecasts.

Revenues hit £1.41bn ($2.7bn), up from £1.35bn in the same period of 2005.

WPP saw strong sales in Latin America, Africa, Asia and the Middle East, but growth was sluggish in Europe.

Investors were disappointed about the failure to meet forecasts and WPP shares led the fallers on London's benchmark FTSE 100 index, down 2%.

Meet targets

The group said that revenue growth for businesses that it had owned for at least a year rose by more than 4% in the third quarter, but this was below the 5% reported a year ago.

It said this was due in part to "pressure in the United Kingdom and a slower rate of growth in eastern Europe".

"They draw attention to pressure in the UK, which we're all very aware of, and also a slightly slower growth rate in eastern Europe, which is a bit of a surprise because that is generally perceived to be a fast-growing area," said Richard Hitchcock, an analyst with stockbrokers Numis Securities.

WPP said that it still expected to meet its targets for the full year, achieving an operating margin of 14.5%, up from 14% in 2005.