WPP weathers Brexit storm to post positive results

A weaker pound may be the driver for “post-Brexit vote” recovery, according to WPP, which still warns against the impact of Brexit causing possible GDP weakness in the short-term or mid-term in the UK and beyond.

Sir Martin Sorrell
WPP, chief executive Sir Martin Sorrell

WPP has released its interim results, revealing signs of cautious optimism for its businesses, which have generally stood up well since Britain voted to leave the EU.

This has partly been put down to the falling value of the pound. In its analysis of current trading, WPP says that there was strong trading in the UK in July, which may be a reflection of a “post-Brexit vote recovery, driven by a weaker pound sterling.”

Upturn in July

July has been a positive month across all WPP regions and sectors with like-for-like revenue and net sales up 4.6% and 1.9% respectively.

The main results give a view of the financial performance of the group for the six months preceding 30 June 2016.

As a group WPP has posted pre-tax profits of £690 million, which is up 15.8%. Meanwhile constant currency revenue – a measure which eliminates the effect of exchange rate fluctuations –  is up 8.9% and like-for-like revenue is up 4.3%.

“Pre-Brexit vote uncertainties”

In the UK “pre-Brexit vote uncertainties” were cited as a reason for a slow-down in growth, which stood at 3.5% in the second quarter, but 4.7% in the second quarter of this year.

Internationally, branding and identity, which is grouped together with healthcare and specialist communications, showed like-for-like net sales growth of 3.7% in the second quarter, compared with 5.2% in the first quarter.

However, the branding and identity, direct, digital and interactive groups margins were “up strongly” and it was the healthcare and specialist communications businesses which had put pressure on the sector.

UK-based WPP design consultancies include Brand Union, Coley Porter Bell, Fitch, Landor and The Partners.

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