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(Alliance News) - WPP PLC's said on Friday reported the second quarter results slightly ahead of its internal expectations, but its first half profit fell sharply due to the non-repeat of an exceptional gain from 2018.
Shares in WPP surged 8.4% in early trade in London on Friday, making it the best performer in th blue-chip index.
The advertising company reported revenue growth of 2.3% in the three months to the end of June to GBP4.03 billion. The company noted that an improvement in North America and the UK was partly offset by lower growth in Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe.
WPP said its revenue in the six months to June 30 increased by 1.6% to GBP7.61 billion from GBP7.49 billion, but pretax profit fell by 44% to GBP478.2 million from GBP846.5 million.
Profit nosedived because of an interim exceptional loss of GBP3.0 million, largely due to restructuring costs, compared to a gain of GBP114.0 million it generated last year in relation to the sale of its investment in Globant SA. In addition, general & administrative costs surged 28% to GBP552.8 million.
Headline operating profit, one of the company's key performance metrics as it does not include any income or costs from disposals or restructuring, fell by 6.8% to GBP729.6 million from GBP782.9 million. Billings also fell, WPP said, by 0.5% in the half to GBP26.53 billion from GBP26.66 billion.
Estimated net new business billings of USD2.93 billion were won in the first half of the year, WPP said.
Looking ahead, the company reiterated its full year guidance of revenue less pass-through costs, which is effectively net income, falling by no more than 2%. Revenue less pass-through costs in the half-year was GBP6.15 billion, same as last year, but down 2% on a like-for-like basis, WPP said.
Its dividend for the period was flat year-on-year at 22.70 pence per share.
Chief Executive Mark Read said: "WPP's performance in the second quarter was slightly ahead of our internal expectations but in line with our full-year guidance and three-year strategic targets. Clients are responding well to our new offer, as evidenced by recent wins and expanded assignments including from eBay Inc, Instagram and L'Oreal SA. An encouraging number of our businesses and markets are achieving good growth.
"When the Kantar transaction completes, our disposal programme will have generated proceeds of GBP3.6 billion, allowing us to return significant amounts to shareholders and reduce our leverage to the low end of the target range."
In mid-July, WPP said it intends to award its shareholders and reduce debt as it agreed to sell 60% of Kantar, its global data and consulting business.
Kantar will be sold to investment firm Bain Capital Private Equity, which values all of Kantar at USD4.0 billion.
The FTSE 100-listed advertising company said it expects to receive USD3.1 billion in cash after transaction costs and will continue to own 40% stake in Kantar. Additionally, WPP said it may receive some other payments during the life of its partnership with Bain Capital.
In a separate announcement, the company said it has appointed Jasmine Whitbread as a non-executive director, effective September 1.
Whitbread is currently the chief executive of London First, a business campaigning group, and is also a non-executive at Standard Chartered PLC and BT Group PLC.
Chair Roberto Quarta said: "Whitbread's experience spans marketing, technology, finance, media, telecommunications and not-for-profit organisations. The board will benefit greatly from this breadth of perspective and her knowledge of so many of the client sectors that WPP serves."
