WPP says 2010 to be flat as profits fall 47% in first half
LONDON - WPP Group has reported a 47% drop in first-half pre-tax profits to £179.3m and said it has reduced its headcount by 6,525 people over the 12 months since June 30 last year on a like-for-like basis.
The company, headed by chief executive Sir Martin Sorrell, said it had budgeted for like-for-like revenues to fall 4% in the first half and was surprised when they dropped by 8.3%.
Pressure was greatest on the group's advertising, media buying and consumer insight businesses, but there was also deterioration in public relations and public affairs between the second and first quarters.
Its results statement prepared the ground for further staff reductions. WPP said that plans, budgets and forecasts will be made on a conservative basis and "considerable attention is still being focused on achieving margin and staff cost to revenue or gross margin targets".
However, WPP said its like-for-like headcount was now "better balanced in comparison to the reduction in like-for-like revenues" and it forecast a "marked improvement in profitability" in the second half.
Between June 30 2008 and June 30 2009, on a like-for-like basis the company reduced its headcount from 113,208 to 106,683, a cut of 6,525 people or 5.8%. As at July 31 the number fell to 105,393, or 6.3% down.
WPP's revenues including businesses acquired since the first half of 2008 grew 28% to £4.29bn. This was driven in large part by the £1.1bn acquisition of TNS in October last year.
But the group predicted 2010 revenues would be flat, or as it said "even Steven", despite the so-called "quadrennial effect" of spending on big events such as the Winter Olympics, football World Cup, the Asian Games and the US mid-term elections.
The company said it would hold its dividend flat at 5.19p per share, but in early trading on the stockmarket its share price fell 3.85% to 500p.
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