Sir Martin Sorrell hits out at 'clunky' rival Publicis Omnicom as advertising group reports strong 5% revenue growth for July
Sir Martin Sorrell's WPP has raised its target for growth after a strong first half saw pre-tax profits rise 19% to £427m.
WPP, which is set to be overtaken as the world's biggest advertising group by the merger of Publicis and Omnicom, couldn't resist criticising the deal.
Sorrell, who admitted the move to create Publicis Omnicom Group was "big, bold and surprising", said that the soon-to-be-created leviathan will have a "clunky" structure and organisation.
"Potential client and, even more importantly, people conflicts are considerable," he said as WPP announced its interim results for the first six months. "We believe a post-POG world presents us and other competitors, as a result, with enhanced opportunities and is at worst neutral and at best highly positive, resulting in further consolidation and concentration."
WPP reported revenues up 7% to £5.3bn in the first half, up 2.4% on an organic growth basis, the measure closely watched by investors and analysts.
The company said that organic revenue growth in July hit 5%, prompting a slight increase in WPP's full-year forecast to just over 3%.
"There has been some slowing of revenue growth rates in the faster growing markets of Asia Pacific, Latin America, Africa and the Middle East and central and eastern Europe, but this was more than compensated by a significant improvement in the revenue growth rates in the mature markets of North America and the United Kingdom in the second quarter," the company said.
WPP's North American operation bounced back to 2.4% like-for-like growth in the second quarter with revenues of £954m, after shrinking 1% in the first quarter.
The UK performed strongly with revenues up 5.4% in the second quarter to £350m, following a 3.7% rise in the first quarter.
The remainder of western Europe continues to face a tough time, contracting 1.2% in the second quarter with revenues at £667m.
While markets such as Germany and Turkey grew strongly, others such as France, Spain, Italy and Greece "remain tough".
WPP admitted that in faster-growing markets that it operates – Asia Pacific, Latin America, Africa and the Middle East and central and eastern Europe – there was a slowdown.
Revenues grew 5.2% in the second quarter to £824m, down from 7.8% in the first quarter.
In terms of performance by communications services sector, only WPP's public relations and public affairs businesses, which include Hill & Knowlton and Cohn & Wolfe, saw a performance decline.
Revenues from PR fell 3.1% in the second quarter, and 3.6% over the first half of the year.
"The sector reflected continuing client examination of discretionary spending, particularly in mature markets," WPP said.
Advertising and media buying continues to be the powerhouse driving WPP, accounting for more than 41% of its £5.3bn revenues.
Revenues grew 4.7% in the second quarter on a like-for-like basis, up from 3.9% in the first quarter. Within this, media buying remains huge for WPP, with like-for-like growth up more than 8% in the first half.
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