Advertising giant WPP H1 profits slump

WPP, the world's second-biggest advertising group, said yesterday its first-half net profit sank 47.9 per cent because of the global downturn but forecast a brighter performance for the rest of the year.

Net earnings sank to £108.4 million in the six months to June from £208.2 million a year earlier, WPP said in a results statement.

Pre-tax profits dived 47 per cent to £179.3 million as a result of the "severe" worldwide recession.

"The results continue to reflect the impact of the significant global economic contraction on most regions and service sectors," WPP said.

"The impact continued to intensify in the second quarter, though results for July did indicate a 'less-worse' picture."

The group said revenues increased 28.4 per cent to £4.29 billion, boosted by the takeover of market research company Taylor Nelson Sofres.

WPP, which ranks second behind US giant Omnicom, said it had slashed around 6,525 jobs over the past year as it sought to improve profitability.

"The impact of the recession on the group's profitability in the first half was severe," WPP said, adding that action had also been taken to cut discretionary costs such as travel and training.

"Further cost actions have been taken in the second quarter, which have also impacted profitability in the first half, through additional severance costs but (this) will improve the picture in the second half."

In morning London trade yesterday, WPP shares slid 3.75 per cent to 500.5 pence on the FTSE 100 index of leading companies.

The group also predicted that revenues would be flat next year despite a host of large events that should boost spending on advertising.

"Although it is still very early to budget or forecast what may happen in 2010, top line revenues will probably be (flat) despite the positive impact of the Winter Olympics in Vancouver, the World Expo in Shanghai, the Asian Games in Guangzhou, the FIFA World Cup in South Africa and the mid-term Congressional elections in the United States," WPP said.

The group bought British firm Taylor Nelson Sofres for £1.2 billion in late 2008.