Category: WPP’s

WPP’s first half revenue up 6 per cent

MUMBAI: The WPP board has announced its unaudited interim results for the six-month period ended 30 June 2004. Revenue was up 6 per cent to $3.70 billion.MUMBAI: The WPP board has announced its unaudited interim results for the six-month period ended 30 June 2004. Revenue was up 6 per cent to $3.70 billion.

All the regions, with the exception of Europe, showed double-digit revenue growth. In the UK, which the WPP states is still a difficult media market, revenue was up 12 per cent. Europe saw growth of 8 per cent. Asia Pacific, Latin America, Africa and the Middle East had revenue growth of almost 29 per cent.

Headline operating profit was up over 13 per cent to $482.5 million and up over 21 per cent on a constant currency basis. Profit before tax was up almost 15 per cent to $321.4 million from $280.0 million in the same period last year.

During this period it was able to attract new business billings of $2.761 billion. The group has estimated that more than 35 per cent of new assignments in the first half of the year were generated through the joint development of opportunities created by two or more group companies. Factors that stimulated growth include the European Football Championships, the ongoing Athens Olympics and the US presidential elections.

The WPP Group was ranked first for net new business gains in the Lehman Brothers, William Blair & Company, Bear Stearns and AdAge surveys for the first six months of 2004.

On a constant currency basis, the combined revenue at Ogilvy & Mather, J Walter Thompson, Y&R Advertising, Red Cell, MindShare and Mediaedge:cia grew by over 16 per cent.

On the flip side, the WPP is concerned about the prospects for the US economy after the presidential election. Bush or Kerry will have to deal with a substantial fiscal deficit, a weak dollar and risks of inflation, not aided by high oil and commodity prices. Higher interest rates may slow the US economy, which continues to be the primary driver of the global economy, despite the increasing intra-dependency and insulation of the Asian economy.

Nontheless it has set the target of 14.5 per cent headline operating margin against a target of 13.8 per cent for this year.

July 5, 2004
WPP’s Stephen Li confirms HSBC account

NEW DELHI: Stephen Li the regional director of WPP Group’s Team HSBC Asia-Pacific, has confirmed that MindShare and Contract Advertising will handle media and creative respectively, for India.

The Hong Kong-based Li, who has worked on the HSBC account for more than five years, is expected to visit India in mid-July.

Speaking to Indiantelevision.com from Taipei, where he is on an official trip, Li said, “The arrangement is that WPP Group resources will be put across the region for HSBC account. The media component will be handled by MindShare whereas Contract Advertising will work on advertising.”

On the decision to opt for Contract in India from the WPP Group agencies, Li said, “Contract seemed to the best fit for the account.” On the work, which predominantly has been seen in print media in India, Li added, “Well, its too early to comment on what level of work is expected to be done (on local and regional basis). At this point of time, we are still working very closely with client and our headquarters in London. But it is expected to be a comprehensive television and print campaign.”

The WPP Group overcame the challenge from Omnicom Group and Interpublic Group (Lowe was handling the account in Asia Pacific region).

June 2, 2004
WPP’s Cordiant acquisition complicates fate of Indian arms

MUMBAI: Will Bates India be working with Rediffusion DY & R or with JWT or with Equus Red Cell? WPP chairman and chief executive Martin Sorrell, was quoted by adage.com as saying that “in Asia, Bates and DY & R work closely together, though there are alternatives to that. Red Cell is in Asia as well.” However, Sorrell was also open about the fact that the Bates brand might exist independently in certain markets. Media reports have already quoted Bates India MD and CEO as saying that Bates could be an independent brand in Asia.

Also unclear is the fate of Zenith Media, the Rs 3.5 billion media buying arm of advertising agencies Bates India and Saatchi & Saatchi in India. Another twist relates to the fact that the Indian arms of Zenith Media and Optimedia, the media buying arm of Publicis, were expected to merge in India by the first quarter of 2002. There were indications that Indian arms of Zenith Media, Starcom and Mediavest were supposed to merge under single umbrella some time back.

The merger will take place on the lines of the international merger that took place in October 2001 between Publicis Groupe SA and Cordiant Communications Group (CCG) PLC. The two combined their media buying operations into one company, the Zenith Optimedia Group. With 166 offices in 59 countries, Zenith Optimedia ranks as one of the top five media spenders worldwide. About 75 per cent of the company is owned by the Publicis Groupe and 25 per cent by CCG plc. Now, the 25 per cent stake will move on to WPP.

On 19 June, the UK-based WPP beat French group Publicis in the bid for troubled British agency Cordiant. After a protracted tussle advertising, WPP will buy out struggling UK ad agency Cordiant. Reports indicate that the deal values Cordiant’s shares at ?10m ($16.8m). WPP will also be taking on up to ?256m of the firm’s debt.

The sale of Cordiant PR firm Financial Dynamics to its management is continuing to be held up by Cerberus Capital Management, a US hedge fund. Cerberus retains $132 million of Cordiant’s $429 million debt and has played a significant role in Cordiant’s sale talks. Cerberus is still negotiating with WPP over that debt. An executive close to talks said Cerberus is eyeing Financial Dynamics, though executives close to Financial Dynamics claimed they are days away from closing their deal.

According to WPP’s proposal, released to the press today, WPP has offered shareholders $17 million and debt holders a total of $429 million. WPP has also identified restructuring costs related to account losses of $12 million, further reorganization costs of $52 million and transaction costs of $27 million.

WPP will offer one new WPP share for every 205 Cordiant shares. The report states that WPP’s bid still requires the approval of 75 per cent of Cordiant shareholders and Active Value owns 17 per cent of the firm’s equity.

WPP’s group chief executive Martin Sorrell said: “The acquisition of Cordiant will make an important contribution to our long-term strategic goals – particularly in marketing services and expansion in Asia. Given that our approach has been widely welcomed by Cordiant’s clients, we also believe that a merger with WPP promises both stability and opportunity to Cordiant’s clients and people.”

Cordiant CEO David Hearn said: “The directors of Cordiant believe that Cordiant will have a sound future under the ownership of WPP. In the light of current circumstances, Cordiant believes that this proposal provides the best outcome that is capable of being achieved for shareholders.”

June 20, 2003