WPP broadens its horizons to grow
Tuesday 18 August 1998
"If you look at the five growth industries they are healthcare, hi-tech, retail, financial services and entertainment and media," Martin Sorrell, chief executive, said yesterday. "We are already very strong in healthcare and retail, and we are building specific practices in the other areas."
WPP is planning to create global divisions capable of selling a vast array of media services - including advertising, media planning and public relations - to clients around the world.
Ogilvy & Mather, the WPP advertising subsidiary, masterminded the campaign behind American Express's new blue card.
Meanwhile, its J Walter Thompson unit recently picked up a worldwide account worth $100m (pounds 62m) a year with Merrill Lynch, the US investment bank.
Mr Sorrell said the move would make the most of the synergies between WPP's various businesses, while also offering it some protection from a general economic downturn.
He was speaking as WPP reported a buoyant set of interim results. In the six months to June, revenues increased by 8 per cent to pounds 900m while operating profits jumped 19.5 per cent to pounds 103.7m. On a constant currency basis, the increase would have been 13 per cent and 27 per cent respectively.
Mr Sorrell said that, before acquisitions, revenue growth was 8.5 per cent, suggesting that WPP was taking market share from its rivals.
Although the figures were in line with analysts' expectations, WPP shares slipped 4p to 400p on fears that the group would suffer from a general economic slowdown.
However, Mr Sorrell said the company had so far seen little overall impact from the Asian crisis, with growth in China, Japan and India making up for a slowdown elsewhere..
He added that, according to early indications, revenues in July were up 16 per cent on a constant currency basis.
Continental Europe and the UK were the fastest growing regions during the first half, each reporting a 19 per cent rise in revenues.
Investment, page 17
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