Home > Media News >
Source: http://www.prweek.com
Growth slowed in WPP's PR and public affairs arm in the second quarter of 2017, with North America, Western Continental Europe and Asia Pacific all easing, mitigated by a strong UK performance.
Like-for-like revenue in the division rose 0.6 per cent to £293m ($376m) in Q2, against growth of 4.4 per cent in the first quarter, the company said in this morning, citing a "much tougher" 2017 overall.
North America, Western Continental Europe and Asia-Pacific were "slower", but the UK "continued the strong growth seen in the first quarter", with a rise of over seven per cent. The Middle East is "also improving".
"Cohn & Wolfe and parts of the specialist public relations and public affairs businesses in the United States and Germany performed particularly well," WPP stated. Cohn & Wolfe has consistently been cited in results announcements as the unit's standout performer.
Net sales margins fell 0.1 points to 14 per cent, although Ogilvy PR, Cohn & Wolfe, and the specialist public relations companies Glover Park and Ogilvy Government Relations, showed "improved margins" in the first half of the year.
Total revenue growth in the division, including acquisitions and on a constant currency basis, was 2.1 per cent in Q2.
Revenue in the division across the first six months of 2017 was £584m ($749m), up 4.4 per cent on a constant currency basis or 2.4 per cent on a like-for-like comparison. Operating profit in the division was £80m ($103m), up from £69m ($88m) in the same period last year.
Like-for-like revenue drop
WPP’s total like-for-like revenue fell 0.8 per cent to £3.8bn ($4.9bn) in the quarter, with overall revenue up 10 per cent - or 0.3 per cent on a constant currency basis.
It compares to like-for-like growth of 0.2 per cent in the first quarter, leaving like-for-likes down 0.3 per cent in the half year. H1 revenue was £7.4bn ($9.5bn).
Underlying earnings (EBITDA) rose 1.7 per cent on a constant currency basis to a little over £1bn ($1.3bn) in H1.
WPP further revised down its forecast for the full year, following "pressure on client spending" in Q2, particularly in the FMCG sector. It now expects both like-for-like revenue and net sales growth to be between zero and one per cent.
The company said July was behind budget and the revised forecast for Q2, with like-for-like revenue down 4.1 per cent. "All regions, except the UK, Latin America and Central & Eastern Europe showed lower revenue than the prior year and all sectors were down," WPP said.
Cumulative like-for-like revenue growth for the first seven months of 2017 is down 0.9 per cent.
Profitability and volatility
WPP said: "After another record year in 2016, the group’s performance in the first seven months of the new financial year has been much tougher, as worldwide GDP growth, both nominal and real, seems to have slowed in the second half of last year and into the new year.
"Profitability, however, improved slightly in constant currency, with like-for-like margins up 0.1 margin points, although constant currency margins were flat in the first half."
"As client spending appears, at least at this stage, to be less predictable, our operating companies are still hiring cautiously and responding to any geographic, functional and client changes in revenue – positive or negative."
WPP said growth in the last year or so had become "even more difficult to find, perhaps due to increasing social, political and economic volatility".
"Even the growth of the digital marketplace has been dogged by issues such as measurability, viewability, fraud, and fake news, let alone the duopoly of Google and Facebook and the growing dominance of Amazon in so many spheres, including, but not exclusively, ecommerce, retail, cloud computing and content."
Right Now
23 Dec, 2024 / 07:51 AM
Dubai is one of the safest cities in the world and this tourist’s experience is proof of it
Top Stories