WPP's Sir Martin Sorrell says group "grinding out" growth despite Brexit

Chief executive Sir Martin Sorrell said the group was “grinding out” growth but international customers remained cautious.
Chief executive Sir Martin Sorrell
Sorrell previously warned of the impact of Brexit on the UK economy.

Shares in marketing giant WPP PLC (LON:WPP) rose to all-time highs Wednesday reporting a boost to revenues, as a weak post-Brexit pound appeared to offset any of boss Sorrell’s earlier fears.

The group saw revenues increase to £6.5bn from £5.8bn the previous year, as the weakened pound resulted in favourable currency translation.

Chief executive Sir Martin Sorrell said the group was “grinding out” growth but international customers remained cautious.

Sorrell previously warned of the impact of Brexit on the UK economy.

In Wednesday’s announcement, he said there was a “limited likelihood of a worldwide recession" but said Russia, Brazil and the UK could possibly see two quarters of negative growth.

Pre-tax profit rose almost 16% to £690mln in the six months to June. Profit after tax fell to £282mln from £601mln however.

Diluted earnings per share stood at 18.9p as compared to 43.0p in the last year. The company also announced that dividends per share rose to 19.55p from 15.91p in the last year.

The group reiterated its full year guidance of like-for-like revenue growth of well over 3% and net sales growth of 3%.

The group said it would focus on balancing revenue and net sales growth with headcount increases and improvement in staff costs to net sales ratio in order to enhance operating margins.

Analysts at Liberum noted that the results were in line with consensus estimates on the top line.

“WPP's first half results beat organic net sales expectations with 3.8% (vs consensus of 3.2%) as well as EBITDA estimates (5% ahead of consensus).” This led to a higher than expected first half DPS of 19.55p.

"With WPP’s reported revenues across the globe rising strongly, the group are the latest FTSE 100 company to receive a boost from the pound’s weakness," commented Hargreaves Lansdown's Nathan Long.

"As the world’s largest media agency, WPP is set to benefit from 2016’s bonanza of ad-friendly global events, including the Olympics, European Championship football and US presidential elections."

"Prospects for future dividends ought to be encouraging," added Long.

Shares rose 2.5% to 1,791p. Almost double the 925p price it floated at back in 2013.

--UPDATE SHARE PRICE, BACKGROUND--

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