WPP shrugs off Brexit as shares hit record high

WPP chief Sir Martin Sorrell urged the UK government to press ahead with Brexit. Picture: Anthony Devlin/PA Wire

Sir Martin Sorrell's WPP's shares hit an all-time high yesterday after the advertising agency giant posted a 15.8 per cent jump in profits and said Brexit would not derail its growth strategy.

However, Sorrell urged the government to get on with Brexit and the mechanics of leaving the European Union to provide more clarity and certainty for business.

“The process around Article 50 and withdrawal will last a long time when, from a business point of view, people want it to be done quickly.”

But he added that after a lacklustre April, May and June in the run-up to the referendum “July was stronger, perhaps reflecting a post-Brexit vote recovery, but even so it’s difficult to see what is going on.”

WPP’s pre-tax profit beat expectations at £690 million while like-for-like net sales grew 3.8 per cent for the six months to 30 June.

That compared with analyst expectations for a revenue increase of 3.2 per cent, with the performance helped by strong demand in North America and continental Europe.

Among WPP’s high-profile agencies are Ogilvy & Mather, Young & Rubicam and JWT. It offers branding, media planning, market research and consultancy services, with blue-chip clients including Ford, Unilever, Tesco and L’Oreal.

WPP’s bullish statement accompanying the figures said: “Particularly, following Brexit, accelerated implementation of growth strategy continues, with revenue ratios for fast growth markets and new media raised from 35-40 per cent to 40-45 per cent over the next four to five years,” the report stated.

The company’s shares rose to the top of the FTSE 100 leaders’ board, rising about 6 per cent to hit a fresh record high of 1,875p before later settling back to close up 1.9 per cent at 1,780p.

WPP said it expects weaker figures for the remaining six months of the year but suggested this had more to do with strong comparative performance in 2015.

Roddy Davidson, an analyst at Shore Capital Markets, called WPP’s interim earnings results “robust”.

“We are encouraged by the positive trading performance and operational momentum revealed in this morning’s results,” Davidson said.

“We remain bullish on WPP’s ability to capitalise on a solid medium-term outlook for global advertising spend – particularly in view of its concerted efforts to build an overweight exposure versus its peers to digital disciplines and faster growing regions, which should also help cushion regional variations and short term volatility in advertising spend.”

Citi analysts said: “WPP’s first-half results are encouragingly strong with a decent beat on an underlying basis amplified by beneficial forex moves.”

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