Monday, August 17, 1998 Published at 10:06 GMT 11:06 UK
Business: The Company File
WPP beats forecasts
Chief executive Martin Sorrell remains upbeat about prospects
The world's biggest advertising group is set for further expansion.
British media giant WPP Group is moving into Japan as it announced sparking profits above market forecasts.
The company said that strong growth in its European and US operations had offset any weakness in demand from Asia and helped it to boost first half profits by 20% to £93.8m from last year's £78.3m.
Stripping out the effects of the strong pound, profits were up 30%.
The figures represent a big turnaround for a company which a few years ago was burdened down with £437m of debt. Now it has become a member of the FTSE 100 - the top hundred companies in London.
The interim dividend was raised to 0.84p from 0.7p.
Earlier this month the company announced it would invest $208m to take a 20% stake in Japanese advertiser Asatsu, the third largest in the country.
WPP is going global, aiming to be in the top five in all twenty of the world's top advertising markets. It has recently made acquisitions in Australia and France.
The company, which owns advertising agencies J. Walter Thompson and Ogilvy and Mather among others, has billings of $27.8bn and represents 300 of top 500 companies in the world.
It operates in 90 countries and employs 25,000 people, including public relations companies like Hill and Knowlton, market research companies like BMRB, and branding and media buying consultancies.
Chief executive Martin Sorrell said July, the first month of WPP's new financial year, had been very strong, and he was "pretty confident" about the rest of the year.
As can be seen, any impact of Asia-Pacific economic difficulties has, so far, been more than compensated for by stronger than budgeted performances in North America and Europe," the company said.
There were no signs yet of slowdown in the United States, Britain or continental Europe but the company was monitoring the situation closely, it said.
First-half North American revenues grew 9%, while the UK and Europe each recorded 19% gains compared to 10% growth for its division covering Asia, Latin America, Africa and the Mideast.
Mr Sorrell said the impact from the Asia Pacific had been minimal in the first half because strong business in China, India and Japan had countered weakness in Indonesia, Malaysia, Singapore, South Korea and the Philippines.
Mr Sorrell said the slowdown in Asian economies presented the company with acquisition opportunities.
"Things are cheaper both from a currency point of view and because people are concerned about current volatility," he said.
Although Asian markets had been "tougher", restructuring measures had "not been significant" and the company had no major restructuring plans in place.
So far there has been a limited reduction in headcounts in Korea Indonesia, Singapore, and Thailand, he added.
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