News Column

WPP To Achieve Dividend Target Early, Pretax Profit Up In First-Half

August 26, 2014

Hana Stewart-Smith



LONDON (Alliance News) - Media buying giant WPP PLC said Tuesday that it is likely to achieve its targeted dividend pay-out ratio of 45% in 2014, a year ahead of schedule, as it saw pretax profit rise in the half-year to the end of June.


The company proposed an interim dividend of 11.62 pence, up from 10.56 pence in the previous year.


WPP posted a pretax profit of GBP491.1 million, up from GBP427.1 million in the previous year, as revenue rose 2.7% to GBP5.47 billion from GBP5.33 billion as the strength of sterling continued to hamper results. Revenues rose 11.3% on a constant currency basis.


Revenues were driven by consolidation trends in the industry, and securing business with existing and new clients, said WPP. Results from pitches after recent pharmaceutical client consolidations benefited its healthcare communications business, it said, adding that the full benefit of several large advertising, digital and media assignments would be be seen in revenues later in 2014 and in 2015.


Net sales fell 1.9% to GBP4.79 billion from GBP4.88 billion, although on a constant currency basis net sales would have risen 6.4%.


In the second quarter, the company saw net sales growth of 4.1% in the US, slightly down from the 4.4% recorded in the first quarter as it saw slower growth in its advertising and media investment management and healthcare communications business. In the UK, net sales were up 6.5% in the second quarter, similar to the first quarter.


In Western Continental Europe net sales dropped 0.3% in the second quarter compared to growth of 1.7% in the first quarter, as it saw improvements in France, Greece, Portugal, Spain and Turkey offsetting weakness in Germany, the Netherlands, Denmark, Norway, Belgium, Switzerland and Italy.


In Asia Pacific, Latin America, Africa and the Middle East, and Central and Eastern Europe net sales improved 7.5% in the second quarter, driven by improvement in Asia Pacific as it invested in businesses in China, India and Pakistan.


Net sales were up 14% in Central and Eastern Europe, boosted by growth in Poland, the Czech Republic and Russia despite current political tensions, although Ukraine was softer, due to ongoing conflicts in the country. Chief Executive Martin Sorrel said in an interview Tuesday morning that whilst Russia had been positive in the first-half, European Union sanctions would have an impact in the future.


The company said it had seen net sales up 2.8% in July compared to the previous year, with all regions and sectors positive, in a similar pattern to the first-half, although slightly lower overall.


WPP reaffirmed its long-term targets of net sales operating margin expansion of 0.3 margin points or more, and headline diluted earnings per share growth of 10 - 15% per year from net sales growth.


Also on Tuesday, the company announced that it will acquire French digital search marketing agency Keyade SAS, and US based research firm InsightExpress LLP. WPP did not provide financial details for either acquisition.


Shares in WPP were trading up 1.1% at 1,240.00 pence Tuesday morning.








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Source: Alliance News


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