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WPP profits up 15% as global marketing confidence grows

August 24, 2016

Ad giant WPP saw its profits grow 15% to £769m ($1bn) in the six months ended June 30.

The UK-based firm, which owns ad agencies Ogilvy & Mather, JWT, Y&R and Greyalso said revenue rose 12% to £6.5bn.

In constant currency terms, profit before interest and taxes was up 10%, showing the effect of the weak pound, which plunged after the June 23 vote to leave the EU. WPP’s profit beat the average analyst estimate of £754m.

“We saw an impact before the vote because of the uncertainty but we haven’t seen that since the referendum,” WPP Chief Executive Officer Martin Sorrell said on a call.

Despite the currency benefit, WPP said the Brexit vote was one of a range of factors contributing to uncertainty among consumers and corporate leaders globally, including political turmoil and sluggish economies.

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With global economic growth stuck in a range of 3 percent to 3.5 percent and little inflation, the company said, advertising clients have little pricing power and face pressure to keep down costs to meet profit targets.

In its release, WPP said there was “limited likelihood of a worldwide recession” but named Russia, Brazil and the UK as possible countries that could see two quarters of negative growth.
WPP’s like-for-like net sales grew 3.8% for the six months to 30 June.

Shares in the company were the biggest risers on the FTSE 100 in early trade, up more than 3%. as analysts hailed the results as “robust”.

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