WPP announces interim results; US, parts of Asia, Latin America report strong growth
The Board of WPP announced its unaudited interim results for the six months ended June 30, 2010, which reflected strong revenue growth, particularly in the second quarter, in the US and in parts of Asia and Latin America.
Total billings of the Group were up 8.5 per cent at £20.333 billion, while reportable revenue was up 3.5 per cent at £4.441 billion. Profits attributable to share owners rose by 39.1 per cent to £150.8 million from £108.4 million, while the board declared an increase of 15 per cent in the first interim ordinary dividend of 5.97p per share.
In Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, revenues were up 3 per cent in the second quarter, compared with -2 per cent in the first three months, driven by particularly strong growth in South East Asia, in all markets except Korea. Africa was up almost 6 per cent in the second quarter, with the FIFA World Cup having a significant positive impact on revenues and up almost 3 per cent in the first six months.
“In the first half of 2010, almost 26 per cent of the Group’s revenues came from Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, a similar percentage to last year and against the Group’s strategic objective of one-third, in the next three to four years,” said a company statement.
On a reported basis, the Group’s staff cost to revenue ratio, including incentives, fell by 1.7 margin points to 60.4 per cent, as compared to 62.1 per cent in the first half of 2009. Explaining this further, the report said that on a like-for-like basis, the total number of people in the Group, excluding associates, at June 30 2010 was 100,822, compared to 107,193 at June 30 2009, a decrease of 6,371 or 5.9 per cent. However, the number of people in the Group increased by 1,658 or 1.7 per cent as at June 30, 2010, compared to the pro-forma figure at December 31, 2009, reflecting net hiring, particularly in the US and in parts of Asia and Latin America, where like-for-like revenue growth is particularly strong.
By communications services sector, all sectors showed very similar like-for-like growth, other than advertising and media investment management, which is now gaining considerable momentum, with year to date growth of 3 per cent. In the second quarter, consumer insight and public relations and public affairs improved significantly, with growth of 5 per cent and over 3 per cent, respectively. In the first half, direct and digitally-related activities accounted for 28 per cent, or $1.913 billion (an annual run rate of $4 billion) of the Group’s total revenues. “In the first half of 2010, almost 61 per cent of the Group’s revenues came from outside advertising and media investment management, a similar percentage to last year against the Group’s strategic objective of two-thirds, again within three to four years,” the company statement added.
Going forward, the company’s strategic focus will be on new markets and new media. “As the impact of the sub-prime, insurance monoline, Bear Stearns and Lehman crises abate and relative performance becomes easier, the Group’s strategic focus on new markets, new media and consumer insight will become even more important. Clients will be increasingly looking for growth, advice and resources in the BRICS and Next 11, in digital communications and in understanding consumer motivations,” the statement said.
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