WPP Interim Results

WPP's interim results for the first half of 2003 show mixed fortunes, with reported revenues down 2.5% to £1,910.8m but on a constant currency basis up 1.8%. Operating profit rose in continental Europe, but was down elsewhere. Information, Insight & Consultancy companies generally remained robust despite difficult economic conditions.

The group had estimated net new business billings for the half year of almost £1.335 billion ($2.135 billion), giving it the number one ranking among advertising and marketing services groups in surveys by Lehman Brothers and William Blair & Co. The revenue of the Information, Insight & Consultancy discipline was up 3.6%, roughly the same as for advertising, while PR and Public Affairs were down 2.9%.

Headline PBIT* fell almost 8% from £253.9m to £234.1m. The group's operating profit worldwide was down from £201.4m to £174.8m - a fall of 10.3% at constant currency. Operating profit for Information, Insight & Consultancy remains at just over 10% of total, ie £23.8m out of £234.1m. Profit after tax was down from £120.3m to £101.9m (-12% constant currency).

Diluted headline earnings per share were down almost 5% (2% at constant currencies) at 12.8p, but the interim ordinary dividend up 20% to 2.08p per share. The operating margin pre-goodwill and impairment was 12.3%.

While operations in North America have benefited from a slight recovery, according to the company's presentation, conditions in the UK are difficult. UK revenue is down 1.8% at constant currency, while all other regions are up by between 2.2 and 3.1%. Countries with the greatest current revenue growth (5-10%) are identified as Germany, India, Japan, Mexico, Spain and Taiwan. As well as targeting regions with potential for high growth, including Asia Pacific, the strategic section of the company's presentation indicates a continued growth in the relative importance of marketing services companies in the overall mix - by at least 10% to something like 2/3 of all revenue.

Detailed figures and comment are available via www.wppinvestor.com/performance/index.jsp


* Headline PBIT: Profit before interest, taxation, goodwill amortisation and impairment.

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