Global advertising giant, WPP, has announced that half-year revenues have reached over £2 billion for the first time ever, spurred by a significant increase in advertising revenue.
Revenues at the world’s second largest advertising group, rose from January to June by 6% year-on-year to £2.03 billion, stimulated by the effects of Euro 2004, the Olympic Games and the US presidential elections.
Pre-tax operating profit outstripped analysts predictions to reach £264.7 million, up 13% on the same period last year and up 21% in constant currencies.
During the six month period, headline pre-tax profit rose by nearly 15% to £234.7 million, while turnover was up 6% to £9.1bn.
All regions experienced double digit revenue growth, except Continental Europe although this area showed improvements in the second quarter, said the statement. The United Kingdom, which is still experiencing difficult trading conditions, had revenue growth of 12%, edging ahead of North America which rose 11.2%.
Particularly strong growth was experienced by Asia Pacific, Latin America, Africa & Middle East which grew by 28.9%, when compared to Continental Europe which was up by only 8.5%.
The group’s brand and identity sector performed particularly well, growing by 18.6%, followed by advertising and media which was up 14.7%. The insight and consultancy departments saw steady growth, up by 6.1%, with public relations revenues up 7%.
WPP’s chief executive, Sir Martin Sorrell said: “2004 has seen a significant improvement in activity particularly when compared to 2001 and 2002 and even in comparison to the stabilisation seen in 2003. Most pundits forecast industry growth rates of 3-4% this year. Levels of activity in 2004 will once again match, or surpass, the levels of activity seen in the internet drive boom year of 2000. Our revenue forecasts for the year continue to be in the exceed of budget and there are significant new business opportunities at both the network and parent company levels.”
In the statement, Sir Martin expressed his concerns about the prospects for US economy after the presidential election. He added: “Whoever is elected will have to deal with a substantial fiscal deficit, a weak dollar and risks of inflation, not aided by high oil and commodity prices.”
However, despite the concerns for 2005, the prospects for revenue and operating margin improvements at WPP remain good, said the statement. The group announced that its headline operating margin targets for 2005 is set at 14.5%, compared to 2004 which was set at 13.8%, while its 2006 objective is set at a minimum of 15%, with a long term operating target of 20%.
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