WPP H1 Pre-tax Profit Climbs; July Trading Strong

(RTTNews) - UK-based advertising giant WPP Group Plc. (WPP.L, WPPGY) Wednesday said its first-half profit before tax increased significantly from the previous year, helped partly by strong revenue growth in North America. Further, the firm said its trading in July has indicated a likely stronger third quarter.

Pre-tax profit increased to 710 million pounds from 491 million pounds last year. The increase reflected improved operating performance, as well as gains on the sale and revaluation of some of the group's associates and investments.

Headline profit before tax was 596 million pounds, while it totaled 532 million pounds in the previous year.

Earnings per share climbed to 43 pence from 27 pence a year ago.

Revenue grew to 5.839 billion pounds from 5.469 billion pounds in the prior year. Net sales advanced to 5.041 billion pounds from 4.792 billion pounds.

Billings grew 5 percent to 23.156 billion pounds. WPP said it continues to benefit from consolidation trends in the industry, winning assignments from existing and new clients, the full benefit of which will be reflected in revenue later in 2015 and into 2016.

Revenue climbed 15.3 percent in North America to 2.164 billion pounds, while UK revenues improved 9.7 percent to 860 million pounds. In Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, or the AP, LA, AME region, CEE, revenue increased 6.9 percent to 1.672 billion pounds.

However, in Western Continental Europe, revenues were 8.1 percent lower a 1.143 billion pounds.

WPP said interim dividend stands at 15.91 pence per share, compared to 11.62 pence last year. The company believes the targeted dividend pay-out ratio of 50 percent is likely to be achieved by the end of 2016.

Further, the company reported a strong July like-for-like revenue growth of 5 percent and net sales growth of 3.7 percent like-for-like, indicating a likely stronger third quarter.

Looking ahead, WPP said 2015 looks to be another demanding year, although a weaker UK pound against a stronger US dollar may continue to provide some modest currency tailwind, which may be now more than offset by a stronger pound against the euro and the fast growth market currencies.

For 2015, the company continues to see like-for-like revenue and net sales growth of over 3 percent. WPP targets operating margin to net sales improvement of 0.3 margin points on a constant currency basis in line with full-year margin target.

The stock fell 1.8 percent in early trade on the LSE at 1,338.00 pence.