WPP reports first-half like-for-like PR revenues rise by 5%

WPP, owner of Hill & Knowlton, Cohn & Wolfe and Finsbury, has reported first-half headline revenue growth of 6.1%, to £4.7bn, while its PR business grew 5% on a like-for-like basis.

Martin Sorrell: WPP CEO
Martin Sorrell: WPP CEO

On a like-for-like basis, which excludes the impact of acquisitions and currency (and in particular the strength of sterling against the dollar), overall revenues were up 6.1%. In the second quarter, like-for-like revenues were up 5.6%, less than the first quarter 6.7%.

Headline operating profit rose 13.7%, to £517.9m during the first half, from £455.3m.

The group said that its global public relations and public affairs revenues grew by 3%, with like-for-like revenues up 5.0% and a marginal improvement in operating margin. The sector accounts for 9.1% of WPP’s overall revenues.

The revenue growth of WPP’s PR business was somewhat behind its advertising and media investment management division (like-for-like revenue growth of 8.1%) and branding and Identity, healthcare and specialist comms (like-for-like growth of 7.3%), but ahead of consumer insight (like-for-like growth of 2.3%).

Geographically, WPP said the US  showed ‘remarkably strong growth’, with constant currency revenues up 7.6% in the first half. The UK, saw strong growth, with constant currency revenues up over 7% in the first half.

Western Continental Europe was said to be ‘more difficult’, but showed considerable improvement in the second quarter, with constant currency revenues up almost 6% compared with just more than 2% during the first quarter.

Latin America showed the strongest growth of all regions in the second quarter, with revenues up more than 12%.

The company said: ‘Any slowdown in the growth rate in the United States is forecast to be balanced geographically, by faster growth in the UK, Western Continental Europe, from admittedly low levels, and faster growth in Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe.

‘In summary, so far so good in 2011, with forecasts in reasonable heart, but there are storm clouds and we still have to see how the latest stock market crisis affects consumer and client thinking and actions. Although there could be changes in the pattern of behaviour after the Western summer holidays in August... any impact may not be felt until 2012. In 2012, we will have the maxi-quadrennial positive impact of the London Olympics and Paralympics, the Eastern European-based UEFA European Football Championships and, most importantly, the United States Presidential elections, all of which usually add at least 1-2% to worldwide demand for advertising and marketing services.

‘For the remainder of 2011, the focus will continue to be on ensuring that our operating companies balance revenue, gross margin and headcount growth... Plans, budgets for 2012 and forecasts will, therefore, be made on a conservative basis and considerable attention is still being focused on achieving margin and staff cost to revenue or gross margin targets.’

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