BOSTON Buoyed by new business and acquisitions, WPP Group posted a 30 percent gain in first-half pre-tax profit to nearly $540 million on a 15 percent revenue spike to approximately $5.4 billion, compared to the first six months of 2005.
Excluding currency fluctuations, first-half revenue rose 13 percent. On an organic basis, excluding fluctuations and the impact of acquisitions, revenue was up 5 percent.
The London-based company said it added more than $4 billion in new business during the first half, while its March 2005 acquisition of Grey Global Group helped boost its numbers for the first six months of this year. (WPP also owns JWT, MindShare, Ogilvy & Mather and Young & Rubicam, among others.)
Account additions in the first half included assignments for Cadbury's Stride, Darden Restaurants, Diageo's Tanqueray, DreamWorks SKG, Hasbro, Johnson & Johnson, Kmart, Macy's, Six Flags and Sprint.
WPP enjoyed organic revenue growth of 9.5 percent in its Asia-Pacific, Latin America and Middle East region, and 4.5 percent in both North America and continental Europe. Growth lagged somewhat in the U.K., rising 1.2 percent.
Operating margins improved to 12.5 percent from 12.1 percent, in line with WPP's full-year margin target of 14.5 percent. WPP said it remains on track to achieve its long-term target of 19 percent.
WPP's performance was more or less in line with its competitors. Last month, both Omnicom Group and Publicis Groupe reported first-half revenue spikes of 7 percent, while Havas said its revenue grew 2.8 percent. [Adweek Online, July 27].
Looking ahead, WPP said in a statement, "As long as the U.S. economy holds up, 2007 should be a good year too, buoyed by the build up to Beijing 2008 and heavy U.S. political spending, in advance of a presidential election, which may pit Hillary Clinton against John McCain."
WPP added, "2008 should be a bumper year, with the culmination of these two major events and the European Football Championships."
The company also injected a note of caution: "Concerns remain ... as the United States and other nations wrestle with increasing oil prices, twin fiscal and trade deficits and the potential impact of changes in interest rate policy. The consumer remains under pressure on both sides of the Atlantic from increasing levels of debt, low savings ratios and potentially fragile house prices."