26th August 2015
As WPP reports its interim results, Ian Forrest, investment research analyst at The Share Centre, explains what they mean for investors…
Global advertising giant WPP, run by Sir Martin Sorrell, reported its interim results this morning. Investors will be pleased to see that pre-tax profits rose by a healthy 45.6% to £710m on a constant currency basis. Revenues in the six months to June were also up 6.8% to £5.8bn. However, it is worth noting that sales in Europe and many emerging markets slowed, with WPP reporting that many companies have become more cautious about advertising spend. Adverse currency movements are also providing a headwind at present but the dividend was raised by 37% and the company said it expects the second half to be stronger than the first half.
Overall, these are a very mixed set of results from WPP. While the profit and dividend growth is clearly good news for those invested, the slowdown in key emerging markets is concerning if not unexpected. However, the group still expects full year sales growth of 3% and better growth in the longer term. We are maintaining our ‘buy’ recommendation due to the strong trading in the UK and US, the good prospects for growth in new digital media and the potential for a recovery in growth in emerging markets.