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WPP

Bleak look to the future by Sorrell as WPP profits fall 47%

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By The Drum Team, Editorial

August 26, 2009 | 2 min read

Sir Martin Sorrell, chief executive of WPP has made a bleak prediction for the immediate future of the advertising having seen the pre-tax profits of his group fall by 47% in the first six months of the year as like-for-like revenue fell by 8.3%.

Sorrell said "Although there is little doubt that CEOs and CMOs feel better about the general economic environment, Armageddon or apocalypse now having been averted, there is little evidence of better heads and stouter hearts translating into stronger order-books or investments."

Having made a number of redundancies across the group this year, WPP’s gross margin fell to 7.8% or 9.6% with the cost of redundancies removed.

He continued: "As the recession has increasingly impacted Western continental Europe, these severance payments have increased in a region where, statutory severance costs are customarily greater."

The company’s overall operation profit fell by 24.5% to £342m, with overall earnings down 14.3% to £455m.

The company said that it was ‘surprised’ that market conditions had continued to decline in the second half of the year.

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