WPP Net Profit Halves in H1

UK marcoms giant and Kantar-owner WPP has reported a 47.9% drop in first-half net profit to £108.4m from £208.2m a year earlier, but predicts a brighter performance for the rest of 2009. Like-for-like consumer insight revenue was down 10%.

Overall group revenues increased 28.4% to £4.29bn, while in the consumer insight segment, revenues for the period climbed 131% to £1.12bn, mainly reflecting the acquisition of TNS in October 2008.

However, removing the effects of the takeover, and taking into consideration currency variability, in the consumer insight division, revenue was down 10%. This was the worst hit segment of all WPP's business sectors, as advertising and media fell 7.8%, PR was down 8.2%, and branding, healthcare and specialist communications dropped 6.9%.

In support of the sector, CEO Sir Martin Sorrell said that effective market research would play an even more important part in the group's future.

'The advertising industry is going to continue to expand but it'll expand in different ways - in different geographies, in different media and based on data and data management... in order to understand how consumers are reacting,' he stated.

The group has cut 6,525 jobs in the past year, in a bid to improve profitability. Around 700 of these jobs were lost in the UK at TNS, ad agencies JWT and Ogilvy & Mather, and the PR firms Hill & Knowlton and Finsbury.

Despite making job cuts, and reducing expenses, travel and training costs, in the six months to June, pre-tax profits sank 47% to £179.3m - the group says this reflects the impact of the economic contraction on most regions and service sectors.

The company said it had budgeted for like-for-like revenues to fall 4% in the first half and was surprised when they dropped by 8.3%.

Earlier today, shares were down 3.75% on the FTSE 100 index of leading companies to 500.5 pence.

Group web site: www.wpp.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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