WPP’s first half results are pretty much as we forecast yesterday – no crystal ball, alas, just the usual corporate leakage – with billings up five per cent to £23bn, like-for-like revenue up 4.9 per cent (organic growth by another name) and after tax profit of £601m. The dividend was up by a third, in line with WPP’s intention for dividends to account for half of retained earnings.
Which should keep shareholders happy. Who include, of course, one Sir Martin Sorrell (left). The full numbers are here.
By geography the US and UK were standouts with Western Europe lagging. By activity advertising and media investment management (as WPP likes to call it) were the stars with so-called data investment management (research to you and me) still in the doghouse, with no overall growth. It did make £100m or so of profit though.
Margins improved to 13.3 per cent, showing, as we noted yesterday, that WPP is getting better at turning its billings into profit. This surely has something to do with its big position in programmatic media trading.
So everything’s fine and dandy (with the exception of research) then and Sir Martin will be breaking out the prosecco?
Well not quite. Actually we get quite a grumpy SMS in his notes, castigating clients for their caution (“procurement and finance take the lead over marketing and investment”) and for asking “suppliers to be banks or insurance companies.” Among other things, he seems to want to see an end to quarterly reporting which, as he says, induces even more caution in CEOs, the people who are sitting on about $7 trillion of balance sheet cash. That’s an awful lot of marketing budget.
And, as ever, there are swans of varying hues all over the place; joined most recently by the stock market meltdown in China. The upshot of all this is relatively slow global GDP growth of around 3.5 per cent, still nowhere near its (unsustainable) pre-Lehman high.
What else? “Horizontality” is now the thing, you won’t be surprised to learn, with WPP now boasting 43 “global client leaders,” handling about a third of its business. They’d better get on to their clients and liberate some of that $7 trillion then.