China acquisitions help boost WPP

WPP Group Plc, the world's second-biggest advertising company, said yesterday that first-half profit rose 2.9 percent, powered by at least nine acquisitions in China and India and faster growth in the United States.

Net income climbed to 181.9 million pounds (US$359.9 million), or 14.7 pence a share, from 176.7 million pounds, or 14.3 pence, the London-based company said in a statement. Revenue rose two percent to 2.92 billion pounds, beating the 2.9-billion-pound estimate of 15 analysts in a Bloomberg News survey.

The company, owner of Ogilvy & Mather Worldwide and the Hill & Knowlton public relations firm, posted its sixth straight profit increase. Chief Executive Officer Martin Sorrell's acquisitions included a stake in Star Echo, a marketing firm in China with clients such as Procter & Gamble Co, and an Indian brand identity firm.

"The drivers of growth have been the US and Asia Pacific, as they have been over the last 18 months," Alex DeGroote, an analyst at Panmure Gordon in London, said yesterday in an interview. "The numbers are slightly ahead of what I was looking for. The outlook does read very positively for 2008." He rates the stock "buy."

Revenue at WPP, whose clients include Ford Motor Co and Unilever NV, rose 5.3 percent, excluding the effects of acquisitions and currency swings. Analysts expected 5.2 percent, the survey showed.

Sorrell said he's optimistic about the company's outlook, in part because of the Summer Olympics next year in China.

"We see the rest of 2007 as being pretty good, certainly better than 2006," he said in an interview. "Into 2008, we see Beijing 2008 as a bonanza for advertising and sponsorship. We'll see the European football championships and the US presidential elections."

Growth may slow in 2009 as the US administration tackles the country's fiscal and trade imbalances, he said.

"The issue is what happens into 2009 after the US presidentials with the twin deficits, with the implications maybe of what we've seen in the financial markets," he said. Ad companies are expanding in emerging markets as growth stagnates in Europe. Sales in China may climb 20 percent this year, according to WPP.

Sorrell said the company hasn't been affected by the crunch in global credit markets.

The company increased its interim dividend 20 percent to 4.32 pence per share. WPP was expected to raise its dividend to 4.30 pence a share, based on the median estimate of six analysts in a Bloomberg survey.