WPP’s interim results: profits up 37%

WPP has reported a 37% year on year increase in pre-tax profits of £334 million in the first half of the year.

The group saw revenues rise 6.1% year on year to £4.7 billion in the six months to the end of June.

In Q1, Sir Martin Sorrell’s company posted revenue growth of 6.7% but this dropped to 5.6% in the second quarter.

WPP expects full-year revenue growth to perform similarly to the 5.9% it has delivered in the first seven months of 2011.

North America, which accounts for 35.6% of the marketing services company’s total revenues, increased revenues by 5.4% in the first half of the year and “continued to show remarkably strong growth”.

The UK (which accounts for 12% of WPP’s global revenues) grew by 5.1%. Latin America was the strongest growth region with revenues over 12%.

BofA Merrill Lynch said the interim results are “reassuring” – 2% ahead on FD EPS, with organic growth broadly in line at 6.1%. The group recommends to buy with a PO of 735p.

For 2012, BofA Merrill Lynch has left its forecast unchanged for now – predicting 2.4% organic growth.

Yesterday, the group released an advertising agency forecast and advised sticking with “best of breed stocks” like WPP – “with its attractive geographic mix and exposure to digital, leading dividend yield, inexpensive valuation and strong liquidity”.