WPP Delivers 32% Hike in Half-Year Profits

29 August 2005

World number two agency holding company WPP Group has set a half-year pace that numero uno Omnicom and other rivals will find hard to match.

The London-headquartered advertising giant, parent of such global networks as JWT, Grey Global, Ogilvy & Mather and Young & Rubicam, unveiled a 32% increase in half-year pre-tax, pre-exceptional profits to £255 million ($406m; €330m).

Worldwide organic sales rose 6%, while business in the USA defied the challenges of an uncertain economic outlook. But, warns WPP ceo Sir Martin Sorrell, consumers on both sides of the Atlantic are under pressure from increasing levels of debt, low levels of savings and "potentially fragile" house prices.

Eschewing his usual caution Sir Martin was in talk-up mode [itself a potential warning signal]: "The prospects for our industry remain very good, as the needs for differentiation through innovation and branding and global expansion grow."

WPP is ahead of the field in striving to meet those needs, hyping such arcana as 'econometrics', defined by Sir Martin as one of the most important areas in the marketing-services industry" [WAMN: 17-Aug-05].

Highlights of WPP's half-year trading results are ...

  • Billings up almost 24% at £11.334 billion

  • Revenue up almost 22% to £2.47bn in both reportable and constant currencies

  • Like-for-like revenue up 6%

  • Headline operating profit up over 31% to £299.6m and up over 30% in constant currencies

  • Headline operating margin up 0.8 margin points to 12.1%

  • Headline profit before tax up 32% to £254.8m and up almost 31% in constant currencies

  • Profit before tax up over 38% to £221.5m from £160m and up almost 37% in constant currencies

  • Estimated net new business billings of £1.908bn
But the group reported slower growth in traditional media, such as network television, newspapers and magazines. This was countered by the rise and rise of new media channels such as product placement, DVDs and the internet.

  • Meantime, on the other side of the globe, WPP is poised to take control of one of Australia's best known ad agencies, George Patterson Partners.
        The A$90 million (US$75.8m; €55.4m; £37.8m) deal has reached its final 'due diligence' stage and okayed by the Australian Competition and Consumer Commission.
        GPP is part of Australia's The Communications Group, which will be merged with WPP's local Young & Rubicam operation.

    Data sourced from WPP Group, BBC Online and the Sydney Morning Herald; additional content by WARC staff