WPP interims slightly ahead of expectations despite FX

Media and public relations conglomerate WPP posted interim results slightly ahead of expectations, although it continued to take a hit from the strong pound. Pre-tax profit was £491m, up 15% compared to £427m in the same period in 2013. Revenue came in at £5.469bn, up 2.7% from £5.327bn a year earlier, while reported diluted earnings per share climbed 25.6% from 21.5p to 27.0p year-on-year. The group, led by chief executive Martin Sorrell, said its performance had been particularly strong in North America, the UK, Asia Pacific, Latin American, African and the Middle East, as well as central and eastern Europe. Sector-wise, advertising and media investment management had been its strongest performers, together with the direct, digital and interactive and specialist communications sub-sectors. Reported billings dropped 3% to £22.06bn from £22.74bn, with the group saying they had been "ravaged" by the strength of sterling. The reported net sales margin was on par with the previous year at 13%.The group also said its targeted dividend pay-out ration of 45% was likely to be achieved this year, well ahead of schedule. Looking ahead, the group said: "July net sales were up 2.8% like-for-like, against a strong comparative growth rate in 2013 of 4.1%. "All regions and sectors were positive, and showed a similar pattern to the first half, albeit slightly lower overall. Cumulative like-for-like net sales growth for the first seven months of 2014 is now 4%." The group declared a 10% increase in the interim dividend to 11.62p. Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "WPP has maintained its positive momentum from the first quarter, with an interim update which again defies the doubters."In particular, net sales showed strong growth, the operating margin figure remains stable, whilst UK revenues posted significant gains."Less positively, WPP's global footprint has led to difficult headwinds in the form of currency translation allied to the strength of sterling whilst, inevitably, broader geopolitical concerns are unhelpful to corporate sentiment.""WPP continues to play its part in the UK growth story, and the general market consensus of the shares as a strong buy should remain intact."Shares had risen 1.87% to 1,250p by 08:25 on Tuesday.NR