LONDON (ShareCast) - (Sharecast News) - WPP, the world's largest advertising company, reported a steady first-half performance on Wednesday, although macroeconomic pressures and challenges in key markets such as China saw it revise its full-year outlook.
The FTSE 100 company posted a modest 0.1% increase in revenue, reaching £7.23bn, while revenue excluding pass-through costs declined 3.6% to £5.6bn.

However, WPP's operating profit jumped 38.2% to £423m, driven by disciplined cost management and reduced restructuring expenses.

It updated its guidance for like-for-like revenue less pass-through costs to move between -1% and 0% year-on-year, down from its previous 0% to 1% forecast.

The company also pencilled in an improvement in its headline operating profit margin of between 20 and 40 basis points, excluding currency impacts.

WPP said it made strides in strategic initiatives, including the launch of new products within its AI-powered marketing platform, WPP Open.

It also announced the sale of its majority stake in strategic communications firm FGS Global to investment giant KKR for $1.7bn.

The sale was expected to unlock substantial value for WPP shareholders, generating around £604m in cash proceeds.

It said the transaction, slated to close by the end of 2024, would be used to reduce WPP's leverage, bringing its net debt to EBITDA ratio comfortably within the target range of 1.5 to 1.75 times.

WPP declared an interim dividend of 15p per share, maintaining the same level as the prior year..

"At our capital markets day earlier this year we set out our strategy to build on and improve the competitiveness of WPP's offer," said chief executive officer Mark Read.

"I am very pleased with the progress we have made in the past six months against each of our strategic objectives, particularly our continued investment in AI, the creation of VML and Burson, and the simplification of GroupM.

"We are strengthening our offer for clients while building a more efficient company."

Read said WPP's second quarter performance delivered sequential improvement in net sales, with continued growth in GroupM, Ogilvy and Hogarth and sequential improvement at Burson, VML and its specialist agencies.

"Importantly, we also saw North America return to growth in the second quarter.

"That said, we have seen pressure in China and in our project-related businesses which, together with an uncertain macro environment, has led us to moderate our expectations for the full-year.

"The sale of our stake in FGS Global is an excellent outcome less than four years after its creation from three separate businesses within WPP."

It would allow the company to focus and invest in its core creative transformation offer, Mark Read said, while "significantly strengthening" its financial position.

"As a team, our priority continues to be improving our competitiveness by delivering a modern, global, creative and integrated offer for our clients.

"The steps we have taken since January to integrate our offer, bring in new talent and invest in AI represent strong progress towards delivering on our medium-term financial targets and to shareholders."

At 0829 BST, shares in WPP were down 2.65% at 698p.

Reporting by Josh White for Sharecast.com.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE