WPP international business perks up

Revenues at WPP Group's international media advertising businesses increased 5 per cent in the first six months of 1992 despite poor economic conditions in the UK and the US, its main markets.

Martin Sorrell, chief executive, said the improvement was largely confined to South-east Asia, Latin America, Japan and parts of continental Europe. He also identified market research, specialist communications - like healthcare advertising - and strategic marketing services as resilient areas.

This is despite the uncertainty surrounding WPP's future in the run-up to last week's shareholders' meeting when financial restructuring proposals were approved. Revenues increased 3 per cent to pounds 601.1m in the six months to 30 June compared with pounds 581.7m.

The pounds 13.5m cost of restructuring pushed WPP's pre-tax profits sharply lower to pounds 1.8m compared with pounds 16.0m.

The restructuring costs were offset by gains from asset sales of pounds 800,000 to form an exceptional charge of pounds 12.7m.

The profits were broadly in line with expectations; WPP had roughly forecast the size of the exceptional item and a profit before tax and exceptional items of pounds 14.5m in its capital restructuring circular.

The loss per share was 8.9p compared with zero earnings last time. There is no dividend for the second year running. Costs have fallen compared with 1991 as the labour force has shrunk by 5 per cent to 20,631.

Net interest paid fell from pounds 22.1m to pounds 20.5m as a decline in interest rates more than offset the pounds 19m increase in net debt to an average of pounds 476m in the six-month period.

Future payments out of earnings for recent acquisitions are estimated to total pounds 58m between 1 July 1992 and the end of 1995. Some pounds 32m of that is payable in cash.

Cross-referrals between the international group of companies increased.

At the end of the half-year, the group worked with more than 900 multinational clients in two or more of its divisions as against 868 at the end of last year. WPP shares rose 1p to 38p.