WPP profits soar to record 174m

WPP, the advertising and marketing services group run by Martin Sorrell, made record profits in 1997 – up 16 per cent to 177.4m before tax.

Turnover rose 2.9 per cent to 7.3bn and the group added 1.25bn in new billings.

But analysts say world currency fluctuations wiped 20m off the profit figure, and turnover would have risen 11 per cent on a constant currency basis.

The company is on course to achieve its goal of increasing its operating margins to the levels of rivals Omnicom and Interpublic Group at 13 to 15 per cent.

Operating margins for 1997 were up one per cent to 11.8 per cent, and analysts believe this will increase by a further one per cent each year.

In its advertising division, which comprises J Walter Thompson and Ogilvy & Mather Worldwide, operating margins for the two were 14.9 per cent. JWT added 191m of new net billings and O&M added 324m.

The information and consultancy division experienced the strongest performance, with revenue growth of 16 per cent. The division includes Millward Brown International and Research International.

But one analyst warns that economic problems in South-east Asia – which accounts for one-sixth of the group’s revenues – could have a negative effect next year.

WPP says that the countries most affected by economic turmoil – including Thailand, Indonesia and South Korea – only account for three per cent of group revenues.

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