WPP Numbers Looking Good; Grey Still on Sorrell's Menu

23 August 2004

"From what we've seen, it's got good people, a good business, strong clients … we continue to noodle with it." Thus on Friday opined WPP Group ceo Sir Martin Sorrell of Grey Global Group.

But given he was no stranger to these facts long before Ed Meyer, Grey's chairman/ceo and controlling shareholder, put his company up for auction, Sir Martin continued his longstanding practice when in buying mode of saying nothing about something.

Grey, as has been its practice since officially confirming the auction, declined to comment. Analysts, however, are guesstimating that Grey -- the sole surviving independent among the globe's top ten advertising agencies -- could go under the hammer for up to $1.3 billion (€1.05bn; £713.8m).

  • Also on Friday WPP revealed its H1 results, reporting net income up year-on-year by 11% to £105.9m for the six months ended June 30. Revenue increased 6% (13% in constant currency terms) from £1.91 billion to £2.03 billion.

    Sorrell also delivered his usual dose of pessimistic realism for the period after the US presidential elections in November. "Whoever is elected will have to deal with a substantial fiscal deficit, a weak dollar and risks of inflation, not aided by high oil and commodity prices," he said.

    But as to WPP's own prospects, Sir Martin was more bullish. WPP has set operating margin targets of 14.5% for 2005 and a minimum of 15% for 2006. But he dug in his heels over a likely maximum margin for the latter year.

    "We want to see where the 2004 and 2005 margins come out. Then, we want to look at 2006 in context of what we've been able to do," said the canny accountant.

    Data sourced from: The Wall Street Journal Online; additional content by WARC staff