WPP posts “surprise” 8.3% drop in revenue
WPP, the marketing communications group, has reported pre-tax profits slumped 47% to £179.3m in the six months to 30 June.
Revenue fell 8.3% on a like for like basis – more than double the expected 4% fall which the company says was a “surprise.”
The company, which owns JWT, Mediaedge:cia and Hill & Knowlton, says that efforts to reduce staff and discretionary costs were “insufficient” and revenues fell faster than expected.
Billings for the group were up 11% over the period to £18.7bn.
The company says that it is more positive about the general economic environment going forward, but “there is little evidence of better heads and stouter hearts translating into stronger order books or investments.”
Adding that as the recession eases, the group’s focus on new markets, new media, and consumer insight become even more important.
The group will continue to focus on long-term targets including improving operating profits by 10-15%.
The company says that operations in the UK and the US continue to be among the worst hit by the impact of the recession while group operations in Latin America and Africa were least affected. Revenue in the UK was down 5.3% on a like for like basis.
WPP is the last of the major marketing groups to report second quarter figures. Interpublic, owner of McCann Erickson and Lowe, reported revenue fell 14.5% in the three months to 30 June, while Publicis Groupe, owner of Starcom and Saatchi & Saatchi, said revenues dipped 6.6%. Omnicom sales dropped 11%.
Yesterday, Chime Communications, owner of Vallance Carruthers Coleman Priest and Bell Pottinger, posted pre-tax profit up 4% to £8.5m for the first half of the year.
