WPP profits rise 25% but UK growth lags rest of the world
LONDON - WPP Group has reported a 25% rise in pre-tax profits for the first half of the year to £333.2m -- a figure below that which analysts had been forecasting.
This compares with profit before interest and taxation of £266.3m for the six months to June 30 2005. Analysts had been forecasting a figure of around £350m, but shares in WPP rose this morning in any case as the company said its prospects, and those of the industry, remained good.
Revenue growth in the UK lagged well behind the US and the rest of Europe, up by only 1.2% on a like-for-like basis. This compares with 4.5% growth in the US and in continental Europe. Once again, revenue growth in Asia Pacific, Latin America and Africa and the Middle East was strong, rising 9.4% compared with last year.
Sir Martin Sorrell, group chief executive, said: "We are finding that our industry is becoming more and more two-paced. Slow growth in traditional media, such as network television, newspapers and magazines, more rapid growth in new media, such as direct, internet and interactive, driven by new technology.
"Slower growth in the mature markets of the United States and Western Europe, more rapid growth in Central and Eastern Europe, Asia, Latin America, Africa and the Middle East. Growth patterns even vary within regions -- for example, slow growth in Western Europe alongside rapid growth in Central and Eastern Europe."
WPP used its interim results to take a swipe at its rivals, saying that it was leading the industry in "coordinating investment geographically and functionally through parent company initiatives, which competitors initially 'pooh-poohed' but now attempt to imitate".
There was also a dig at the role of business in keeping consumer confidence low, the lament that "company boards remain cautious, perhaps cowed by regulatory measures and fear of failure".
Turnover for the first half was up by 27.1% to £14.4bn.
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