Insight Firms Help Growth at WPP
WPP has announced its unaudited interim results for the six months ended 30th June 2008, showing good revenue and profit figures in all regions and for all divisions including insight. While his own firm may be healthy however, CEO Sir Martin Sorrell says the current merger process is ‘not doing [TNS] much good’.
WPP says its own results show ‘record levels of performance throughout all regions and sectors of the business and good revenue and operating profit growth’.
The Information, Insight and Consultancy division improved in the second quarter, with first half revenues of £486.5m, 14.6% of the group total and up 7.2% on a constant currency basis. This growth is above that of the largest division Advertising, Media Investment Management which rose only 4.3% but below PR and Public Affairs at 9% and Branding & Identity, Healthcare and Specialist Communications at 14.7%. The last of these includes direct, Internet and interactive communications.
Reported operating margins for the insight division, which includes a long list of research firms topped by RI and Millward Brown, were up by 0.4 points to 10.1%.
Among the group highlights, billings were up 11.8% at £16.871bn, reported revenue up 14.3% to £3.339bn and up 4.3% like-for-like, in the first half. Headline operating profit was up 18.4% to £453.4m from £383.1m and up 9.2% in constant currencies. Profit before tax was up 15.1% to £338.5m and up 3.4% in constant currencies, and diluted earnings per share up 21.1% to 17.8p and up 6.4% in constant currencies.
On a like-for-like basis, the average number of people in the Group, excluding associates, grew from just over 89,000 in 2007 to around 93,200 in the first half of 2008, an increase of 4.7%. More than 80% of the additions are in the faster growing markets of Asia Pacific, Latin America, Middle East and Africa and Central and Eastern Europe.
The figures show progress in Sorrell’s stated aim of broadening the base of the group, almost 55% of whose first half 2008 revenues came from outside advertising and media investment management, up from just over 53% last year. WPP is also growing its direct and digitally-related activities, which now account for around 25% of the Group’s c.$13bn annual total revenues.
The group says its region covering Asia Pacific, Latin America, Africa and the Middle East continues to grow fastest, with revenues up over 17% on a constant currency basis and accelerating in the second quarter. Continental Europe was up 4.8%, slightly lower than the 5.2% in the first quarter, with Central and Eastern Europe particularly strong at almost 20%. UK revenues grew 4.6%, and the US 5.8%.
Sorrell has repeatedly said that he expects 2009 to be a low point in the four-year cycle and that 2010 should be stronger.
Meanwhile Sorrell continues to cast doubt on GfK’s optimism on finding backers for its TNS bid, telling the UK’s Guardian newspaper: ‘I think it's a joke - we know they can't [raise the money] from everything we've heard’ and suggesting that ‘The Takeover Panel should do something about it’; and telling Dow Jones Newswires: ‘The financial backing GfK said it previously had to buy TNS is no longer there’. Of the effects of the ongoing uncertainty on TNS, he told the Guardian: ‘This whole bid has been a terrible process. All is fair in love and war, but they're not doing the business much good.’
Web site: www.wpp.com .