WPP cheers industry with 32% rise in profits
LONDON - WPP Group, owner of agencies including Ogilvy & Mather and JWT, has reported a 32% rise in pre-tax profits for the first half of the year to £254.8m, beating analyst forecasts of £250m.
The company headed by chief executive Sir Martin Sorrell, saw revenue rise by 22% to £2.47bn. On a like-for-like basis, excluding the impact of WPP's acquisition of Grey in March this year, revenue at the group was up by 6%.
WPP saw new billings of £1.9bn in the first half of the year, and said it estimates that more than 35% of these wins were generated through the joint development of opportunities by two or more companies within the group. New business wins include Samsung and Unilever.
The company reported that while the UK growth rate had stabilised, it still lagged behind other regions, and that the market remained relatively weak. Growth on a like-for-like basis, excluding acquisitions including Grey, was 2.7% in the UK, against a rate of 6% across the group as a whole.
As predicted, the strongest growth was seen in Latin America, Asia Pacific, Africa and the Middle East, up by 12.6% on a like-for-like basis on the same period in 2004, with China and India leading the way, up 22% and 13% respectively. While Western Europe improved somewhat, WPP said Russia and the CIS countries were more buoyant.
WPP said that, despite the quadrennial boost provided by the 2004 Olympic games and US presidential elections, levels of activity in 2005 should match or surpass last year.
"Corporate profitability remains strong on both sides of the Atlantic and, as a result, advertising and marketing services spending does too, if anything continuing to strengthen," the company said.
The move has prompted WPP to up its profit margin target from 13.2% to 13.7%.
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