WPP sees 1% rise in like-for-like first-half PR business

WPP has reported 1% revenue growth on a like-for-like basis in the first half of the year as the firm confirms plans to move back to the UK.

Martin Sorrell: WPP CEO
Martin Sorrell: WPP CEO

WPP reported 1% revenue growth on a like-for-like basis in the first half of the year this morning.

The owner of Burson-Marsteller, H+K Strategies and Cohn & Wolfe saw overall group revenues rise to £4.97bn in the six months to 30 June, up from £4.71bn during the same period last year. Pre-tax profits rose to £357.7m from £334.3m.

The results come as WPP said it was planning to move its headquarters back to the UK after shifting operations to Ireland in 2008 for tax reasons.

The group’s PR and Public Affairs business made up 9.2% of group revenue and rose from £221m in the first half of 2011 to £234m this year. This growth represents 6.3% on a constant currency basis, but just 1% like-for-like growth.

In constant currencies, PR and public affairs revenues were up 5.8% in the second quarter, with like-for-like up 0.3%. These compare to 6.8% and 1.9% respectively in the first quarter.

The group said that the US, the UK and Asia Pacific grew less strongly in the second quarter, with the public affairs businesses in Washington and Penn Schoen Berland, the US polling business in Burson-Marsteller, particularly affected.

Cohn & Wolfe continued the strong growth seen in the first quarter, with Hering Schuppener, one of the group’s specialist PR businesses in Germany, also improving.

Reported operating margins fell 2.0 margin points to 13.5%, with most businesses, except Cohn & Wolfe, showing lower margins.

Overall the group warned of slower growth in 2012 compared with the past two years due to a difficult advertising market.  Full-year sales, excluding acquisitions and currency fluctuations, will grow at 3.5% this year against a forecast of 4%.

The WPP statement said: ‘2014 looks a better prospect, with the World Cup in Brazil, the Winter Olympics in Sochi and the mid-term congressional elections in America.

‘The first two events will continue to reposition Brazil and Latin America and Russia and Central and Eastern Europe in the world’s mind, just as the Beijing Olympics did for China and Asia and the World Cup did for South Africa and the continent of Africa – and, possibly, London 2012 did for the UK.’

Meanwhile, WPP confirmed it is to return to the UK subject to share owner approval in December. WPP moved to Ireland in 2008 to take advantage of the country's 12.5pc corporation tax rate, but plans to move back after the Governments changes to corporate tax rules to remove the threat of double taxation on overseas earnings.

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