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International: WPP profits up 32%

08-September-2005
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International: WPP profits up 32%

WPP, the advertising giant led by Sir Martin Sorrell, said today like-for-like revenues rose by 6% in the first half of the year, with growth of 3% following in July.

Overall revenues, which include the effect of acquiring the Grey Global network earlier in the year, increased 22% to £2.47bn in the six months to the end of June, the company said.

WPP, the world's second largest advertising group and home to agencies including JWT and Young & Rubicam, also said its pre-tax profits were up 32% to £255m.

The company's best performing regions were Asia Pacific, Latin America, Africa and the Middle East, which between them grew like-for-like revenues by 12.6%, more than double the company average.

Of these, Latin America showed the fastest growth, while China and India drove the improvement in the Asia Pacific operations.

Sir Martin said Latin America was benefiting from economic recovery in Argentina and the strength of Brazil and Mexico.

"By and large the growth is because of a general growth across the region, it's been the case for the last year or so, in Latin America it's even greater than in Asia. But Asia longer term will be stronger than Latin America."

As well as the Asian powerhouses of China and India, countries such as Thailand and Indonesia are important growing markets for WPP, Sir Martin said.

Revenues were up 5.9% in North America and 4% in Europe, while the UK lagged behind with 2.7% growth.

WPP said the state of the UK market had "stabilised", while in Europe the performance of central and eastern countries was outpacing the likes of Germany, France, Sweden and Denmark.

Sir Martin said a key driver of growth had been the part played by new media, with 15% of the company's revenues now from direct marketing, interactive advertising and the internet.

"As traditional media - television, newspapers and magazines - come under pressure, direct, interactive and internet become more important," he said. "It's a big strategic challenge for clients in terms of trying to reposition."

He predicted that traditional media companies would continue to build their online capabilities to keep up with this trend.

In recent weeks newspaper companies Trinity Mirror and DMGT have bolstered their online operations through acquisitions of web-based classified advertising businesses, while Rupert Murdoch's News Corporation has hit the acquisition trail in its bid to overhaul its online strategy.

Source: MediaGuardian

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