LONDON: WPP, the world鈥檚 largest advertising group, reported a better than expected jump in first-half net sales and said its British operations showed signs in July of a 鈥減ost-Brexit recovery,鈥� sending its shares to a record high.
Run by high-profile businessman Martin Sorrell, the UK group said investments in technology had helped to reduce some costs, while the plunge in the pound following Britain鈥檚 vote to leave the European Union had helped reported revenues.
In the long term, however, Sorrell said clients were cautious about big investments as they wait to see what type of deal Britain can secure with its global trading partners.
The firm has little pricing power, he said, and the second half could be tougher than the first due to challenging comparative figures from last year.
鈥淚n April to June, we saw a slowdown in the UK before the vote and after the vote in July we saw some strengthening,鈥� said Sorrell, a leading advocate of EU membership.
鈥淪o it鈥檚 mixed at the moment. It鈥檚 still very uncertain because what business wants is certainty and what the government wants is room to maneuver.鈥�
WPP offers branding, media planning, market research and consultancy services, with clients including Ford, Unilever, L鈥橭real and Tesco.
The group has been outperforming rivals in recent years, doing particularly well in the United States.
The owner of agencies Ogilvy & Mather, Young & Rubicam and JWT reported first-half like-for-like net sales up 3.8 percent, compared with analysts鈥� expectations of around 3.2 percent, due to strong demand in North America and continental Europe.
Reported revenue was up 11.9 percent to 6.5 billion pounds ($8.6 billion), helped by the weakness of the pound against the dollar and euro. On a like-for-like basis, growth hit 4.3 percent.
The group also nudged up its full-year revenue forecast, predicting growth of 鈥渨ell over鈥� 3 percent compared with 鈥渙ver鈥� 3 percent before, sending its shares as much as 6.3 percent higher to a record high of 1,857 pence.
WPP said its British operations had traded more strongly in July than the previous quarter, which it said perhaps reflected a 鈥減ost-Brexit vote recovery鈥� driven by a weaker pound.
After the June 23 vote, WPP said it would step up its drive to increase sales in its fast growing markets and new media divisions, aiming for them to make up 40-45 percent of revenue over the next four to five years, from 35-40 percent previously.
It will also look to grow more quickly in its major continental European markets.
鈥淲PP鈥檚 first-half results are encouragingly strong with a decent beat on an underlying basis amplified by beneficial forex moves,鈥� said Citi analysts, who have a buy rating on the stock.
The first-half update follows an impressive performance from French rival Publicis which reported strong underlying sales growth in July.