Bumper year ahead as WPP first-half profits rise
LONDON - WPP Group has said first-half profit rose by 2.9%, the sixth straight profit increase, with like-for-like revenues up 5.3%, boosted by acquisitions in China and India and faster growth in the US.
Net income climbed to £181.9m from £176.7m, with revenue up 2% to £2.92bn in the six months to the end of June. WPP acquisitions have included a stake in Star Echo, a marketing firm in China with clients including Procter & Gamble, and an Indian brand identity firm Quadra.
WPP's business in the US continues to expand with the growth rate in the first half up over 8%, on a constant currency basis, compared with 6.5% growth in the first quarter. It said that net new-business billings were around £1.6bn in the first half.
As in the first quarter, the fastest-growing regions were Asia Pacific, Latin America, Africa and the Middle East, with revenues up almost 12%.
Within Asia Pacific, growth remains strong, with revenues up almost 11%, while mainland China and India continued the rapid growth seen in 2006 and the first quarter of 2007.
First-half like-for-like revenues in China and India are up almost 29% and 22% respectively.
Continental Europe was up 6%, an improvement over the 4.4% growth in the first quarter, with Central and Eastern Europe particularly strong at almost 19%.
The UK remains the slowest-growing region with revenues up 3.7%, and gross margin up 4.9% reflecting the relative scale of market research revenues in the United Kingdom.
WPP, heading by CEO Sir Martin Sorrell, said in a statement: "The group's performance in the first half of the year mirrored the continuing good economic conditions. Western Europe improved, although the UK remains relatively weak."
Looking ahead, WPP said 2008 should be a "bumper" year, buoyed by the Beijing Olympics and US political spending before the Presidential election, which may see Hillary Clinton nominated and elected
But it cautioned there may be slower growth in 2009, following the expected strength of 2008 and as the US administration tackles the country's fiscal and trade imbalances.
WPP said that media investment management continues to show the strongest growth of all its service sectors, along with direct, internet and interactive.
It said that direct and digital activities now account for approximately 23% of the group's total revenues, which are running at the rate of approximately $12bn a year.
However, there was positive news for brand advertising, particularly in the new faster-growing markets.
There was growth also in PR and public affairs, which showed significant improvement over last year, reflecting the positive impact on the sector's growth of social networking on the web, which it said demonstrated the increased effectiveness of editorial publicity over paid for publicity.
Overall WPP said that 53% of the group's revenues came from outside advertising and media investment management, in the first half of 2007.
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