WPP profits slump despite cutbacks

WPP has seen its pre-tax profits plummet by 47 per cent to £252.2 million in the first six months of 2009, despite making cutbacks of more than 6 per cent to its global workforce.

Sir Martin Sorrell…WPP chief
Sir Martin Sorrell…WPP chief

Operating profit also fell by 24.5 per cent to £342.2 million while its gross margin slipped by 7.8 per cent, or 9.6 per cent when redundancy costs are taken out. WPP's like-for-like revenue dropped by 8.3 per cent overall, 5.8 per cent in the first quarter and 10.8 per cent in the second quarter.

The company blamed the intensifying impact of the recession in the second quarter for the results.

A WPP statement said: "The second half is forecast to show a marked improvement in profitability."

There was some good news in the first half of the year as billings rose by 11.1 per cent to £18.74 billion while reported revenue grew by 28.4 per cent to £4.29 billion. WPP also reported estimated new-business billings of £1.2 billion.