WPP's UK revenue surges by 22% but strong pound hits pre-tax profits

WPP, the owner of MediaCom and Ogilvy & Mather, has reported pre-tax profit of £491.1 million in the first half of 2014, up 15.0 per cent year on year, while UK revenues surged by 22 per cent in Q2.

Sir Martin Sorrell: the chief executive officer of WPP Group
Sir Martin Sorrell: the chief executive officer of WPP Group

According to WPP’s interim results, the group reported revenue of £5.47 billion in the six months to 30 June 2014, an increase of 2.7 per cent year on year. Revenue climbed 11.3 per cent in constant currency.

WPP said the difference between constant currency and the reported revenue growth reflect the continuing strength of the pound against the US dollar, Euro and many currencies in the faster growth markets.

Trading at the UK arm of the business improved in the second quarter with revenue of £426 million, up 21.7 per cent year on year and representing like-for-like growth of 19.2 per cent.

In comparison Publicis Groupe's UK revenues declined by 1.9 per cent in Q2.

The UK grew from 12.5 per cent of WPP in Q2 2013 to 14.7 per cent in the same period of 2014.

Across the first half of the year the UK generated revenue of £784 million, up 17.2 per cent year on year and representing like-for-like growth of 15.2 per cent. In H1 2014 the UK was 14.4 per cent of the group, up from 12.6 per cent in H1 2013.

Operating profit in the UK was £91 million, up 7.0 per cent year on year, although the margin slipped from 13.9 per cent in H1 2013 to 13.7 per cent in the first six months of 2014.

In the UK, WPP said there is "continuing strong growth" in media investment management, with "growth accelerating" in the direct, digital and interactive, public relations and public affairs and specialist communications agencies.

The growth in those areas was "offset by some softening" in data investment management, healthcare communications and branding and identity.

The group’s global pre-tax profit of £491.1 million represented an impressive 33.7 per cent growth in constant currency.

WPP’s operating profit was £531.1 million up 3.4 per cent year on year and 16.7 per cent when the effect of fluctuations in currency exchange rates is stripped out.

To ease comparisons with its rivals, WPP also reports its results in US dollars and Euros.

In US dollars its revenues were $9.135 billion, up 11.3 per cent year on year and ahead of Omnicom’s $7.4 billion (up 4.8 per cent).

In Euros WPP’s revenues were up 6.5 per cent €6.7 billion, ahead of Publicis Groupe’s €3.4 billion (up 0.2 per cent).

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