Reported revenue rose 14.3% to £3.34bn (8.1% in constant currency) for the six months to 30 June. Pre-tax profit rose 15.1% to £338.5m. In constant currency, this reduced to a gain of 3.4%. This was ahead of expectations for the advertising group, whose brands include Ogilvy & Mather, and Young & Rubicam.
The group declared an interim dividend up 20% to 5.19p per share.
All of WPP’s major markets recorded gains for the first half – North America rose 2.1%, the UK 2.5% and Continental Europe 3.2%, but it was in emerging markets (including Asia Pacific, Latin America, Africa and the Middle East) that the group saw the biggest jump, with revenue growth of 10.7%.
Business has been given a boost by the Beijing Olympics and the US presidential election. This has helped it weather more difficult markets and the group said levels of activity would match those for 2007.
However, the prospects for 2009 remain unclear, particularly if there is no resolution to the banking crisis and commodity price hikes. The group said in a statement: “In addition, the new United States President will have to wrestle with twin fiscal and budget deficits in early 2009 and post the Olympics, Chinese growth may slow due to inflationary (particularly food price) concerns and the impact that a weakening United States economy has on the rest of the world.”
The shares rose 12.5p to 488p. The price has dropped around 200p since the start f the year and the group now trades on around 9x earnings, well behind its nearest competitors. The advertising market remains vulnerable to a slowdown and budgets have undoubtedly been cut back, but the shares could bounce strongly at any sign of a recovery.