WPP Profits Plummet 15%; Sorrell Rehearses Cassandra Act

19 August 2002

An information seepage to the fiscal press and analysts over the weekend indicates that the world’s largest agency holding company, WPP Group, will tomorrow (Tuesday) report a sharp decline in first half profits.

WPP chief executive Sir Martin Sorrell [always the canniest of Cassandras] will tell the world that the adverse effect of recent stock market turbulence on consumer and corporate confidence has made a double-dip recession more likely.

Analysts, whose prescience is often based upon such timely leaks, ‘predict’ that WPP will post underlying H1 revenues down by 8% resulting in a 15% decrease in pre-tax profits to about £210m ($323.57m; €328.41m) after goodwill amortisation.

However, the seers also believe that the decline in underlying revenues will ease in the second half of 2002 resulting in an annual result some three per cent down on 2001.

Sir Martin is already on record that there will be no significant upturn in global advertising expenditure until 2004 when the confluence of the Athens Olympic Games and the US presidential election will create conditions favourable to an upturn.

Some industry observers see this as a ‘safe haven’ position. If Sorrell is proved right, many will applaud his shrewd judgement; if wrong, who’ll care amid the celebrations?

Data sourced from: Financial Times; additional content by WARC staff