WPP results expected to reveal 48m profits

WPP Group, the world’s largest marketing services organisation, is expected to turn in pre-tax profits of over 48m – an increase of more than a third – when it announces its interim results tomorrow (Thursday).

The figure is towards the upper end of City expectations and compares with 36.2m during the previous six months to June 30. Other likely indications of continued recovery are increasing revenues of about eight per cent, a substantial hike in earnings per share and a small increase in the dividend. Panmure Gordon is looking for EPS (fully diluted) of more than 3.6p (2.6p last year) and a dividend of 0.44p (0.39p).

WPP will need an increase in operating margin of a percentage point to nearly 8.5 per cent if it is to satisfy the conditions underpinning its financing. Last week, WPP successfully renegotiated its borrowing terms in a deal which is likely to save the company about 2m a year in debt repayment. Last year, WPP paid 35.6m interest on its loans. The group is also expected to report new business gains of about 650m.

In June, WPP shareholders cleared a pay package for chief executive Martin Sorrell, worth up to 28m over five years (MW June 30).