Top Financial News
Wed, 17 Feb 1999, 6:00am EST
WPP Second-Half 1998 Implied Profit Rises 22% on U.S. Advertising Sales
WPP Second-Half 1998 Implied Profit Rises 22% on U.S. Ad Sales
London, Feb. 17 (Bloomberg) -- WPP Group Plc, the world's
No. 2 advertising company, implied second-half profit increased
22 percent, as client spending in North America, WPP's most
important market, more than made up for a decline in Asia.
Second-half profit through Dec. 31 at WPP, owner of Ogilvy
& Mather Worldwide and the J. Walter Thompson Co., rose to 78.7
million pounds ($128.49 million), or 10.6 pence per share, from
64.3 million pounds, or 8.9p per share, for the same period in
1997. Implied profit was calculated by subtracting first-half
results from the full-year.
Earnings at advertising companies such as WPP or Omnicom
Group Inc., the world's largest advertising company, are being
boosted by more ad spending in the U.S., the world's largest ad
market, as consumer marketing companies such as Gillette Co.
spend more for advertising as their profits increase. That's
more than making up for a slump in spending in Asian countries
facing recession.
''What counts is advertiser spending in the U.S.,'' Filippo
Lo Franco, an analyst with BNP Equities in Paris, said before
the results were released. ''The last figures show the problems
in the U.S. were overrated and advertiser spending held up.''
WPP shares yesterday closed down 9 pence, or 1.83 percent,
at 483p. In New York, WPP American depositary receipts closed up
3, or 3.95 percent, at 79.
The company said full-year profit rose to 140.3 million
pounds, up 20.9 percent from 116 million pounds. Fully diluted
earnings per share rose 19.7 percent to 18.8 pence from 15.7p
for the 1997 full-year period.
WPP said North American operations contributed 47.3 percent
of the group's total operating profit in 1998, up from 43
percent in 1997. Operating profit as a percent of the total
group from Asia-Pacific, Latin America, Africa and the Middle
East fell to 13.1 percent last year from 20 percent in 1997.
The company added it would pay a full-year dividend of 2.56
pence per share, an increase of 20 percent compared with the
previous full-year dividend of 2.13p. The dividend beat an
estimate of 2.5p taken from an average forecast of five analysts
surveyed by Bloomberg News.
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