NEWS: H&K recovery sets the seal on WPP half year

Hill and Knowlton, the world’s third largest PR agency, has returned to profit for the first time in four years.

Hill and Knowlton, the world’s third largest PR agency, has returned to

profit for the first time in four years.



Parent company WPP Group said revenues at H&K were up by 8.8 per cent

for the six months to 30 June 1996 and the agency had ‘moved into

significant operating profit’ for the first time since 1992



The recovery set the seal on impressive first half results for WPP,

which also owns Ogilvy Adams and Rinehart. Operating profit for the

group was up 26 per cent to pounds 83.8 million and like-for-like

margins were up by 1.2 per cent to 10.2 per cent.



Overall margins for the PR operations were up by more than four points

to three per cent, compared with an operating deficit of 1.3 per cent in

the first half of 1995. PR revenues grew by 9.3 per cent to pounds 54

million, with revenues at OA&R up by 10.8 per cent. Additional revenues

from PR operations attached to other divisions of WPP take the total

figure to pounds 66 million - a like for like increase of 12 per cent.



PR revenue as a proportion of total group revenue grew to seven per

cent.



WPP chief executive Martin Sorrell put the improvement in H&K’s

performance down to strong revenue growth combined with ‘getting the

balance right between staff costs and revenue and getting property costs

down’.



Sorrell said he hoped to bring PR margins up to ‘Shandwick levels’

(around ten per cent). ‘Clearly our objective is to bring them to that

level, sooner rather than later,’ he said. Industry analysts say the

group has set itself a timeframe of two years to achieve this.



While not ruling out some acquisitions in PR, Sorrell said both H&K and

OA&R had good coverage and the emphasis now is on organic growth.



WPP was one of three groups bidding for French group BDDP, which owns UK

PR agency Lynne Franks and has a majority stake in Financial Dynamics.

However, its offer was rejected. The earlier withdrawal of Cordiant

leaves just Grey Advertising in the running.



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