UK outperforms group as WPP suffers 47% plunge in pre-tax profit

LONDON - WPP's UK revenue fell 5.3% year on year in the first six months of 2009, although this was better than its North American and continental European operations.

Sir Martin Sorrell: chief executive of WPP, which has posted a 47% slump in pre-tax profit
Sir Martin Sorrell: chief executive of WPP, which has posted a 47% slump in pre-tax profit

Group-wide, WPP suffered a 47% plunge in pre-tax profits to £179m. The advertising giant, led by Sir Martin Sorrell, revealed the average number of people in the group, excluding associates, was 108,973 in the first half of the year, compared to 112,105 in 2008, a decrease of 2.8%.

Geographically, on a like-for-like basis, which excludes the impact of currency fluctuations and acquisitions, WPP's UK revenue fell 5.3% and dropped 10.1% in North America, while in western continental Europe, it dipped 10.5%. WPP did not break out its actual UK revenue or profit.

WPP said: "Geographically, the impact of the recession was most keenly felt in the United States and western continental Europe in the first six months, with the United Kingdom and western continental Europe more affected in the second quarter, along with other regions.

"Only Latin America and Africa remained relatively unscathed, the only region or continent showing like-for-like growth in the first half."

Estimated net new business billings of £1.2bn were won in the first half of the year, with WPP noting that it is benefiting from consolidation in the industry, winning briefs from existing and new clients.

Its advertising, media and investment management division, home to media agencies such as MediaCom and Maxus, posted a 7.8% like-for-like year-on-year decline in revenues.

This was slightly better than WPP's public affairs and public relations arm, where revenue declined 8.2% on a like-for-like basis year on year. Again, WPP did not break out the actual revenues for these divisions, nor, for its individual agencies.

The firm warned that the impact of the recession on profitability in the first half "was severe" adding that although action was taken to reduce staff and discretionary costs, this was "insufficient as revenues fell faster than budgeted". 

WPP added that "although there is little doubt that CEOs and CMOs feel better about the general economic environment, Armageddon or Apocalypse now having been averted, there is little evidence of better heads and stouter hearts translating into stronger order-books or investments - at least, yet.

"Things look better, as they naturally should, partly because of easier comparatives."

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