Latin America and Africa led the way
Like-for-like revenue growth in North America improved as the year progressed, from -1% in the first quarter to up over 5% in quarter four, with particularly strong growth in Advertising and Media Investment Management, Healthcare Communications and parts of the Group’s digital operations, especially AKQA. Data Investment Management also performed well, with like-for-like growth of 5% in the final quarter. In constant currencies, full year revenue growth in this region was over 4%, while like-for-like revenues were up almost 3%.
In the UK, full year revenue growth was almost 11% in constant currencies and almost 5% like-for-like. The rate of growth slowed in the final quarter to over 5% in constant currencies, and over 2% like-for-like, partly due to strong comparative rates of growth in the final quarter of 2012.
The Group’s Advertising and Media Investment Management, Public Relations & Public Affairs, direct, digital and interactive and Healthcare Communications operations all performed strongly, partly offset by lower revenue growth in Data Investment Management. However, overall gross margin (or net sales) in the final quarter increased by well over 5% on a like-for-like basis, with stronger gross margin growth in the custom research business. Full year gross margin (or net sales) in the UK increased by almost 7% on a like-for-like basis.
Western Continental Europe, like the UK, slowed slightly in the final quarter, with both constant currency and like-for-like growth of over 1%. For the year, Western Continental Europe revenues grew 0.5% like-for-like (almost 2% in the second half) compared with 0.1% in 2012. Italy, Turkey, the Netherlands and Germany all showed good growth in the final quarter, but Spain, Portugal, Belgium, Switzerland and Austria were tougher.
Our strongest regions in 2013 were again Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, with constant currency growth of almost 8% and like-for-like growth of over 6%. Growth in the fourth quarter was similar to the full year and driven principally by Latin America, Australia and New Zealand, Central and Eastern Europe and Africa, the CIVETS and MIST countries. After a difficult first half, Central and Eastern Europe improved significantly, with like-for-like growth of over 10% in the second half (and over 12% in the fourth quarter), with strong growth in the Czech Republic, Russia and Poland. The Middle East slowed in the fourth quarter, while Africa grew by over 9% like-for-like. Latin America showed consistently strong growth for most of 2013, with like-for-like revenues up well over 8% in the final quarter and up 9% for the year.
Full year revenues for the BRICs1, which account for almost $3 billion of revenues including associates, were up almost 7% on a like-for-like basis, with the Next 112 and CIVETS3 up over 9% and over 15% respectively. The MIST4 was up over 9%. In 2013, almost 30% of the Group’s revenues came from Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe – slightly down compared with the previous year,as result of the strength of sterling against the currencies of many of the markets in these regions. On a constant currency basis, 30.5% of the Group’s revenues came from these regions, up 0.7 percentage points compared with 2012 and against the Group’s strategic objective of 40-45% in the next five years. Markets outside North America now account for 66% of our revenues.
1 Brazil, Russia, India and China.
2 Bangladesh, Egypt, Indonesia, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam (the Group has no operations in Iran).
3 Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.
4 Mexico, Indonesia, South Korea and Turkey.
Chapter 6 of 13