WPP raises full-year dividend and revenue outlook as advertising giant sees healthy growth in new partnerships
- WPP revealed total pre-tax profit has increased by £60m to £562m
- Epic Games, Audible and Audi were among the groups to make deals with WPP
- Despite the results, WPP shares were the biggest faller on the FTSE 100 . this morning
WPP has increased its annual guidance and dividend payments following continued growth in deals with large corporate clients.
The world’s largest advertising agency, founded by marketing guru Sir Martin Sorrell, said it would pay investors an interim dividend of 15 pence per share, up 20 percent from last year.
It comes after the company revealed total pre-tax profits rose by £60m to £562m in the first six months of 2022, thanks to solid demand from the healthcare, technology and consumer packaging sectors.
Returns: WPP, the world’s largest advertising agency, said it would give investors an interim dividend of 15 pence per share, up 20 percent from last year
Among those making deals with WPP were video game developer Epic Games, the makers of Fortnite, who hired the company to produce “digital experiences” for brands in the metaverse.
Others included Audi, the online audiobook store Audible and food makers Danone and Mars, the latter of which retained its contract with WPP subsidiary MediaCom as its global media partner.
This helped the company’s total net new business invoices rise to $3.4 billion, from $2.9 billion in the previous year, although it made much more in the second half of 2021 when it secured a very lucrative contract with Coca-Cola. Coke in.
Nevertheless, WPP’s recent strong performance has led it to raise its annual organic revenue outlook from a previous forecast of 5.5 to 6.5 percent to between 6 and 7 percent.
It also expects an increase in its overall operating profit margin, although it was hit financially by deteriorating inflationary pressures and tight lockdown restrictions in China.
Chief Executive Mark Read said: “Our services are mission-critical – driving growth, building brands, innovating and helping customers navigate an increasingly complex marketing environment.
“As major advertisers increasingly look to integrate their marketing investments, we are well positioned to serve the world’s largest companies, as evidenced by our success with Coca-Cola, which we are now rapidly boarding.”
Despite the optimistic outlook, WPP shares fell 7.2 percent to 828.6 pence in early trading on Friday morning, making it the biggest faller on the FTSE 100 Index.
WPP’s results come within a day of the Bank of England warning it expects the UK economy to plunge into recession later this year and the biggest blow to real household income since records began.
And just a week ago, the International Monetary Fund cut its global growth forecasts and raised its inflation forecasts amid the ongoing war in Ukraine, ongoing coronavirus outbreaks and China’s economic slowdown.
Russ Mold, investment director of AJ Bell, said many investors believe WPP acts as “a decent barometer for the broader economic climate,” as companies tend to spend more on advertising when confidence is high.
He added: ‘WPP’s first half results actually look pretty solid, but investors are so concerned about the economic backdrop and what it says about WPP’s prospects that they have reacted negatively.
“There is clearly a belief that WPP’s recent momentum, which helped boost its annual sales outlook, cannot hold up in the long run.”