29.08.2013 11:38:24
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WPP Lifts Forecast As H1 Profit Rises, Stock Up
(RTTNews) - WPP Group Plc. (WPP.L, WPPGY) Thursday raised its profit forecast for the year, after the advertising giant reported a significant increase in first-half earnings on strong revenue growth. In early morning trading, the stock gained close to 4 percent on the LSE.
WPP, which owns agencies Young & Rubicam and Ogilvy & Mather, said revenue growth in July was stronger than in the first half at 5 percent on a like-for-like basis.
The company now sees full year like-for-like revenue growth of over 3 percent, slightly ahead of the previous forecast of around 3 percent, with a stronger third quarter and second half than the first half.
Pre-tax profit for the first half rose to 427.1 million pounds or $663.4 million from 357.7 million pounds, mainly due to lower revaluation of financial instruments than in 2012. On a headline basis, pre-tax profit amounted to 523.7 million pounds, while it totaled 466.8 million pounds last year.
Profit attributable to equity holders of the parent edged up 1.1 percent to 280.9 million pounds from 277.8 million pounds. Earnings per share slid to 21.5 pence from 21.6 pence.
Revenues rose 7.1 percent to 5.33 billion pounds from 4.97 billion pounds, while Billings climbed 5 percent to 22.74 billion pounds.
Revenue growth reflected like-for-like growth of 2.4 percent, 3.1 percent growth from acquisitions and 1.6 percent from currency, reflecting a weaker sterling. The second quarter saw a significant improvement over the first quarter.
Revenue on a constant currency basis was up 5.5 percent, chiefly reflecting the weakness of the pound sterling against the US dollar, the euro and renminbi.
Segment-wise, Advertising and Media Investment Management revenues advanced 7.2 percent to 2.193 billion pounds, while Data Investment Management revenues climbed 3.9 percent to 1.238 billion pounds. Branding and Identity, Healthcare and Specialist Communications segment reported a revenue growth of 12.6 percent at 1.438 billion pounds.
In North America, revenue grew 5.3 percent to 1.840 billion pounds, with a like-for-like growth of 0.8 percent, amid increased second-quarter client spending in parts of the media investment management, data investment management and healthcare businesses.
UK revenues climbed 13 percent to 669 million pounds, as advertising and media investment management, branding and identity, healthcare and direct, digital and interactive businesses showed particularly strong growth in the second quarter.
Western Continental Europe saw a revenue growth of 6 percent at 1.258 billion pounds. The region benefited from restructuring, but some markets like Spain are seemingly bottoming out.
Asia Pacific, Latin America, Africa & the Middle East and Central and Eastern Europe saw revenue growth of close to 8 percent at 1.560 billion pounds. Africa showed strong growth in the first and second quarters.
Further, WPP said its Board has decided to target an increase in the pay-out ratio to 45 percent over the next two years. As a result, the company declared an increase of 20 percent in the interim dividend to 10.56 pence per share, compared with the 10.1 percent growth in headline earnings per share.
The company reaffirmed its long-term target of above industry revenue growth and annual profit before interest and tax of 10 to 15 percent per annum, delivering margin expansion of 0.5 to 1.0 point.
The stock is up 3.82 percent on the LSE at 1,223 pence.
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