WPP profits 'ravaged' by strong pound

Sir Martin Sorrell admitted forex has hammered the world's largest advertising group and said he sees a tartan swan lurking...

by Adam Gale
Last Updated: 23 Jun 2015

The strong pound is responsible for a lot of things: pressure on exports, cheap foreign holidays and, of course, imaginative reporting by UK-based businesses. And if anyone knows how to put a good spin on some numbers, it’s surely going to be the world’s largest advertising firm.
WPP today announced a 1.5% year-on-year rise in headline pre-tax profits to £532m in the first half of 2014. But, the interim results declared, profits would have been up a whopping 15.6% were it not for the ‘ravages’ of the strong sterling over the last year. Presumably the numbers would have been better still if all of WPP’s major competitors had miraculously gone out of business over the last year, but that’s by the by.
The fact is that, in the real world of frustrating forex rates, WPP has seen strong like-for-like growth outside of the UK all but wiped out by the equally strong pound. Their non-UK revenues rose by only 0.58% to £4,685m (while UK revenues rose 17.2% to £784m), but this figure would have been 10% higher under constant currency conditions. Effectively, forex cost WPP over £450m in revenues in the first six months of this year.
WPP founder and boss Sir Martin Sorrell admitted reported results have suffered as a result of the strong pound, but also said he continued to see sinister, geo-political ‘black swans’ (those pesky 'unknown unknowns') affecting business, such as the crises in Gaza, Iraq and Ukraine.

He added the Scottish independence referendum created ‘further uncertainty to the United Kingdom economy’. What manner of swan this represents is as yet uncertain. Perhaps tartan?

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