WPP, on some measure the world’s largest advertising agency, today reported a 7.4% fall in pre-tax profit in the first half of this year.
The slide, to £821 million, was a more respectable 2.3% when the effects of foreign currency movements were stripped out.
Earnings per share were 42.6p lower than during the first half of last year at 42.6p, but, again, this fall was reduced when foreign-exchange effects were disregarded.
Company has “performed strongly”
The interim dividend will be unchanged from the first half of last year, at 22.7p, but WPP added that its share buy-back programme of £201 million is equivalent to 1.3% of issued share capital.
The WPP share price dropped by 72.5p, or 5.68%, to 1,204p.
This was the first substantial set of results at WPP since its founder Sir Martin Sorrell departed amid allegations, which he has denied, of personal misconduct and misuse of company property.
Yesterday, WPP announced that Mark Read would succeed Sir Martin at the helm of the company.
Like-for-like figures take account of acquisitions and disposals in order to give a consistent comparison.
Mr Read added, “At our first quarter trading update we said there was no standing still, and in the last few months we have made progress in a number of important areas.
There have been suggestions that WPP is an agency designed for old-style advertising such as billboards, magazine spreads and television campaigns, and that it is out of date in the rapidly evolving world of digital promotion and advertising targeted at individual consumers.
But Mr Read said in today’s WPP report: “As chief executive, my focus will be on invigorating our company and returning the business to stronger, sustainable growth.”
Sorrell sets up in competition
Reported revenue during the first half was 2.1% lower at £7.493 billion, “impacted by currency headwinds of 5%”, but disregarding currency effects saw revenue up 2.9%, and 1.6% higher on a like-for-like basis.
Sir Martin is an advertising industry legend, held up by many as Britain’s answer to the Mad Men – the ultra-driven Madison Avenue advertising executives featured in the television series of that name. For decades, he was synonymous with WPP, but controversy mounted in recent years as he was given bonuses and pay-outs totalling millions of pounds, prompting shareholder protests.
He is thought to be still entitled to £14 million from WPP and further payments.
Perhaps more controversially still, WPP did not insist on a “no compete” clause in his departure terms, and he has already established a new agency.