Advertising and marketing services major
) reported almost flat first half 2013 earnings of £280.9 million
($433.7 million) or 21.5 pence per share (33 cents per ADS)
compared with £277.8 million ($428.9 million) or 21.6 pence per
share (33 cents per ADS) in the first half of 2012.
Revenues increased 7.1% year over year to £5,326.7 million
($8,224.9 million). However, on a constant-currency basis,
revenues grew 5.5% year over year. The rise in revenues was led
by 2.4% organic growth, 3.1% inorganic growth and 1.6% gains due
to the effects of currency exchange rates.
Moreover, the company reported strong billings that increased
5% year over year to £22.7 billion ($35.1 billion).
Revenues by Region
During the first half of 2013, revenues in North America
climbed 5.3% year over year to £1,840 billion ($2.841.1 million)
on a reported basis, and 2.9% on a constant currency basis.
Revenues in the U.K. improved 13.1% to £669 million ($1,033
million), driven by a healthy rise in advertising and media
investment management business, branding and identity, healthcare
and direct as well as digital and interactive
In the Asia Pacific, Latin America, Africa, the Middle East as
well as Central and Eastern Europe, revenues rose 7.9% year over
year to £1,560 million ($2,408.8 million) on a reported basis and
8.1% on constant currency basis, driven largely by robust
performances in Latin America and the BRIC (Brazil, Russia,
India, China) countries. Revenues in Western Continental Europe
increased 6.0% year over year to £1,258 million ($1,942.5
million) with a relatively steady performance in Belgium,
Germany, Netherlands and Turkey.
Revenues by Segment
By segment, Branding and Identity, Healthcare and Specialist
Communications was the strongest performer in the first half of
2013 with revenues of £1,438 million ($2,220.4 million), rising
12.6% year over year increase on a reported basis and 11.0% on a
constant currency basis. Revenues from Advertising and Media
Investment Management improved 7.2% to £2,193 million ($3,386.2
million) on a reported basis while Data Investment Management's
revenues increased 3.9% year over year to £1,238 million
($1,911.6 million). However, revenues from Public Relations &
Public Affairs dipped 0.2% year over year on a reported basis to
£458 million ($707.2 million) and 2.2% on a constant-currency
Balance Sheet & Cash Flow
WPP reported cash and cash equivalents of £1,258.6 million
($1,943.4 million) for the six-month period ended Jun 30, 2013.
Cash provided by operating activities was £175.2 million ($270.5
million) at the end of Jun 30, 2013. Free cash flow for the first
half of 2013 aggregated to £392 million ($605.3 million), most of
which was used to finance share repurchases. WPP repurchased
shares worth £133.1 million ($205.5 million) during the first
half of 2013. At Jun 30, 2013, net debt was £2,717.1 million
($4,195.5 million) compared with £2,861.3 million ($ 4,418.1
million) in the comparable year-ago period.
WPP completed 26 acquisitions worldwide across all the
business segments during the first half of 2013. Of these, 17
acquisitions and investments were made in new markets, out of
which 13 were made in new media. Moreover, 7 acquisitions were
made in data investment management, including data analytics and
the application of technology 2 acquisitions were made to cater
to the requirements of individual clients and agencies.
In an attempt to reward its shareholders, WPP decided to raise
its dividend payout ratio for 2013 from 40% to 45%-50%.
Consequently, the company increased its interim dividend by 20%
to 10.56 pence per share (16 cents per share), payable on 11 Nov
2013 for shareholders on record of Oct 11..
Going forward, the company expects 2013 to be similar to 2012,
though a little less challenging due to increased client
confidence despite an uncertain macroeconomic environment and
sovereign debt issues. WPP expects like-for-like revenue and
gross margin growth of around 3% and operating margin improvement
of 0.5 margin points in 2013, with revenue and gross margin
growth at a faster rate than the industry average. The company
expects to achieve it by virtue of its leading position in the
new markets and new media, and its depth in consumer insight. At
the same time, WPP expects to remain active in the case of share
buybacks and acquisitions in order to extend its footprint as
well as consolidate its position in the existing markets.
WPP currently carries a Zacks Rank #2 (Buy). Some other stocks
worth considering include
MDC Partners Inc.
Corporate Executive Board Co
). All these also have a Zacks Rank #2 (Buy).
Note: £1 = $1.5441 (period average from Jan 1, 2013 to Jun 30,
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