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WPP Group suffers slump, profit falls 54%

By Princewill Ekwujuru with agency report

Following the recessionary headwinds, WPP Group, London, an advertising agency said it has recorded decline in profit of 54 percent to 217million from $469 million.

The company also said its  revenue and operating margin for the first half of 2009 grew stiffer in Q2.

In dollars, the U.K. based holding company saw its profit fall 54 percent to $217 million, from $469 million in the first half of 2008.
At the same time, revenue declined 3 percent to $6.40 billion, from $6.59 billion in the same period last year.

First half organic revenue slid 8 percent, after first_quarter organic revenue fell nearly 6 percent. Competitors such as Omnicom Group, Interpublic Group and Publicis Groupe have experienced similar declines.
WPP ended the first half with an operating margin of 8.1 percent, down significantly from 13.6 percent in the first six months of 2008.
In a statement, WPP attributed the declines to the impact of the global recession. And although the company cut costs by laying off staffers and reducing discretionary expenses such as in travel, “this reduction was insufficient as revenues fell faster than budgeted,” WPP said in a statement.

“Like_for_like revenues were budgeted to fall by almost 4 percent in the first half and fell, in fact, by over 8 percent with the deterioration against budget even greater in the second quarter, which was a surprise.”
Severance costs also drove up expenses and those costs are expected to continue in the second half.
At the end of June, WPP’s headcount totaled 106,683, down 6 percent from the total of 113,208 as of June 2008. July staff cuts further reduced the total to 105,393.

WPP is now forecasting flat revenue next year “despite the positive impact” of client spending behind events such as the Winter Olympics in Vancouver, the World Expo in Shanghai, the FIFA World Cup in South Africa and the mid_term congressional elections in the U.S.


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