WPP PLC (LSE:WPP) said its first-half profit and revenue rose thanks to "sustained demand" for its advertising services, leading it to raise its guidance for the year, undeterred by the economic downturn.
Adjusted sales are expected to rise 6% to 7% this year, compared to end-April growth guidance of 5.5% to 6.5%.
"We remain confident in our ability to deliver annual revenue less pass-through costs growth of 3-4% and headline operating profit margin of 15.5-16%," the FTSE 100 company said in a statement, celebrating by upping the interim dividend 20% to 15p per share.
The advertising and marketing conglomerate reported a 10.2% jump in revenue to £6.75bn in the first half of 2022, in line with analysts expectations, with like-for-like revenues rising 8.7% after a stronger second quarter of 9.3%.
An estimated total of US$3.4bn of net new business was secured during the half, with new assignments including Mars, Sky, Audi and Danone (OTCQX:DANOY).
Pre-tax profit was 6.1% higher at £419mln whereas underlying profits were 12% higher at £562mln, reflecting "stronger business performance" year-on-year partly offset by loss on divestment of Russian operations.
Headline EBITDA for the first half was up 6.5% to £745mln, but lower than £840mln guidance, whereas headline operating profit was up 8.2% to £639mln.
Operating profit margins of 11.6% were down 0.5pt on prior year "as expected", due to higher personnel costs and return to business travel.
The shares fell 6.5% to 834.8p in early trading on Friday.
AJ Bell investment director Russ Mould: “WPP’s first-half numbers actually look fairly solid, but investors are so concerned about the economic backdrop, and what it says about WPP’s prospects, they have reacted negatively.”
“Clearly there is a belief that WPP’s recent momentum, which helped it lift its annual sales outlook, can’t last in the long-term.”
“While chief executive Mark Read argues WPP is yet to see any evidence of a big retrenchment in spending by its clients, this feels likely to come at some point.”