The world’s largest advertising group claims US and UK recovery is stronger than expected. The numbers so far for WPP in the first half can back up that fact also. They saw a pre-tax profit of 224 million pounds, or a 36 per cent increase over the same time last year.
WPP commented on the character of this recession, saying: “The expected LUV recovery – L-shaped in western Europe, U-shaped in the US and V-shaped in Brazil, India, Russia and China and next 11 – is now more LVV-shaped, with the US, in particular, recovering much more strongly than anticipated.”
WPP reported that traditional advertising has experienced better-than-expected recovery so far this year. Although decreasing by 10 per cent last year, advertising and media investment management surged by more than 6 per cent in Q2 of this year.
Some analysts estimated WPP would be buying back a lot of its own stock in a share buy back scheme, but that did not come to fruition. Instead it raised its dividend by 15 per cent.
WPP offered its own opinion on the world economy saying that it did not believe a double-dip recession would take place across the globe, but did warn that the road to recovery will be difficult.
WPP cautioned the problems of the Eurozone could worsen, and that the UK’s austerity plan could inhibit growth. They also thought the US recovery could run into problems as the stimulus continues to be run through.
“There is also concern about the Obama administration’s attitude to business, particularly as profits, as a proportion of GNP, are virtually at an all time high and the US corporation tax yield is low, particularly at a time when all sectors of society are being asked to make a sacrifice,” they said.