Advertising firm WPP ‘grinding out’ growth

Advertising giant WPP says it is “grinding out” growth as clients remain cautious amid slower global growth.

It reported pre-tax profit up 15.8% to £690m in the first half of the year.

The world’s largest advertising group said worldwide GDP growth “seems to have slowed in the second half of last year and into the new year”.

The firm said trading in the UK was stronger in July, “perhaps reflecting a post-Brexit vote recovery, driven by a weaker pound sterling”.

WPP chief executive Sir Martin Sorrell had previously warned about the impact of leaving the EU on the UK economy.

Sir Martin said that he was pleased with the company’s performance post-Brexit, acknowledging that the UK had “perked up” in July after the vote.

But he suggested that it might have been even stronger without the referendum. Overall, he said it was too early to tell how the vote to leave the EU would affect the economy.

Asked if he wanted Brexit negotiations to start as soon as possible, in other words triggering the “article 50” clause which would prompt the exit talks, Sir Martin said: “Basically, yes.”

“What business wants is things resolved as quickly as possible, but practically, that’s pretty impossible,” he said, adding that the government needed time to negotiate.

“We’ve outsourced trade negotiations for the last 10 years or so, so building an organisation that can negotiate all these trade agreements... is a very big task and will take a long time.”

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”.

“Quite apart from the immediate boost to the quality of its overseas earnings given the weakness of sterling in the wake of Brexit, “maxi-quadrennial” events such as the Olympics and the impending US elections also provide an environment in which the company will typically prosper,” said Richard Hunter from Wilson King Investment Management.