London: WPP, the world’s largest advertising group by revenue, posted first half like-for-like sales at the low end of forecasts but said it expected a better second half due to job cuts and easier comparatives.
WPP shares, up 10% in the past week, fell 3.2% in early trading on news first-half like-for-like sales fell 8.3%, a worsening from 5.8% in its first quarter and compared to a forecast for 7.8%.
Chief executive Martin Sorrell told Reuters that trading had improved in July from the fall in sales of over 10% in the second quarter.
Global advertising sector revenues have been battered this year as clients have cut spending during the downturn.
WPP rival US group Omnicom has reported a first half like-for-like drop of 8.8%, while French firm Publicis posted a second-quarter drop of 8.6%.
WPP first-half headline earnings before interest, depreciation and amortisation (EBITDA) fell 14.3% to £455.7 million ($745 million), on revenues up 28% to 4.3 billion, in line with forecasts.
The group expects improved second-half profitability due to improving comparatives and after cutting headcount by almost 6 percent on the year.
Sorrell told Reuters it would be 2010 before the group saw positive revenue growth. He also said WPP was happy with its debt profile, and did not need to raise equity even if ratings agencies downgraded the group.
WPP said its headline operating margin before severance and one-off costs, another key metric for the industry, fell to 10%, compared to a Reuters poll of 10.3%.
Sorrell said the company had made provisions for a similar rate of severance in the second half.
The group said there was still little evidence of stronger order-books or investments despite chief executives feeling better about the general economic environment but said things would look better partly due to easier comparatives.
“Although it is still very early to budget or forecast what may happen in 2010, top line revenues will probably be “even Steven”, WPP said.
The interim dividend was unchanged at 5.19 pence.