WPP surges but warns of a tough 2012

 
Steve Dinneen
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SIR MARTIN Sorrell’s WPP yesterday reported a 37 per cent surge in pre-tax profits but said it expects to feel the impact of the economic slowdown next year.

Investors were not deterred though, with its stock soaring 7.4 per cent, recouping some of the losses suffered this year.

Its first half results, which saw sales jump more than six per cent year-on-year, were buoyed by strong performances in emerging markets and digital.

It added that any slowdown in the US is likely to be balanced by faster growth in the UK, western continental Europe, Asia Pacific, Latin America, Africa, the Middle East, and central and eastern Europe.

Sir Martin (pictured) said: “People are investing in their brand. Most of our clients work on a calendar year basis, so we have to watch what happens in 2012. And 2013 will be the acid test.”

He also suggested the sell-off that has seen WPP drop 25 per cent in the last seven weeks has been overdone, adding: “We’re trading at five times Ebitda, that can’t be right.”

Richard Hunter, head of equities at Hargreaves Lansdown, said: “WPP continues to tick the boxes through a combination of generally strong growth and conservative planning.

“Whilst the company is preparing for a challenging 2012, events such as the Olympics and the US Presidential elections may provide further opportunities for growth.”

WPP, whose ad agencies include JWT and Ogilvy & Mather, upgraded its 2011 outlook in April after it outperformed peers in the first quarter.