By Kevin McCauley
WPP today recorded a 14 percent rise in first-half operating profit to $853M on a six percent jump in revenues to $8.9B as the U.S. economic slowdown in ad/PR spending was offset by “good growth” in the U.K. and developing world.
CEO Martin Sorrell believes it is too early to “predict the impact of the recent correction in the world equity markets on consumer and corporate behavior,” but notes there have been no cutbacks yet.
He sees a disconnection between the “macro picture as defined by the stock markets and the micro picture as defined by individual company results.” He does warn that “markets look to the future, often a year or so n advance, and are rarely wrong.”
Sorrell said “boardroom fear” has CEO’s cutting capital spending in favor of boosting marketing outlays.
“Why increase fixed costs in uncertain times, when you can increase or maintain sales by increasing variable marketing expenditures-even if we think marketing spending should be a more fixed investment, not a variable cost?” reads his statement.
On the deal front, WPP sees a “very significant pipeline of reasonable priced small and medium sized potential acquisitions.”
Sorrell has established a $650M acquisition war chest for the year. That’s up from a $165M annual cap.
WPP looks forward to the 2012 London Olympics and U.S. presidential election, a race that could result in $4B spending).
|