WPP profits up despite ‘softening’ in branding sector

Network WPP has reported an increase in profits despite what it calls a ‘softening’ among its branding and identity groups amid a ‘demanding’ financial context.

WPP chief executive Sir Martin Sorrell
WPP chief executive Sir Martin Sorrell

WPP operates consultancies including AKQA, Fitch, Landor and The Partners. In its 2014 interim results it has reported a 1.5 per cent increase in pre-tax profit.

In the UK, WPP says its net sales were up 6.5 per cent, with ‘growth accelerating’ in its digital and interactive consultancies. However, it says this was ‘offset by some softening’ in its branding and identity groups.

WPP says that digital revenues now account for almost 36 per cent of all its revenues.

WPP chief executive Sir Martin Sorrell describes 2014 as a ‘demanding’ year, with the strong UK pound and weaker fast-growth market currencies affecting the group’s reported results.

He says that there are also concerns over four geo-political ‘grey swans’ and how they may affect the international economy. Sorrell identifies the ‘continuing fragility’ of the Eurozone, bleak prospects in the Middle East, a possible slowdown among BRIC countries and issues around dealing with the US budget deficit.

He says clients are broadly risk-averse, and ‘remain focused on a strategy of adding capacity and brand-building in both fast growth geographic and functional markets, like digital and containing or reducing capacity, perhaps with brand building to maintain or increase market share, in the mature, slow growth markets.’

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