Hit by the one of the worst advertising downturns on record, it abandoned its operating margin target of 15% this year and said last year’s level of 14% would also be difficult to achieve.
“It seems unlikely that significantly improved performance will occur in 2002 and that any recovery will have to await 2003 or, perhaps, even more likely 2004,” WPP said.
WPP, home to three top-tier global agency networks, Ogilvy & Mather, J. Walter Thompson and Young & Rubicam, posted a 17% slide in first-half pre-tax profit before goodwill amortisation and impairment to $322.5million.
“The revenue and profit figures were broadly in line, if a little shy of forecasts, but we could see some shaving back of full-year figures on the basis of the operating margin short-fall,” one analyst said.
Some advertising executives had harboured hopes of a recovery in the beleaguered industry later this year, but WPP chief executive Martin Sorrell warned in June that any comeback would have to wait until the US presidential elections and Athens Olympic Games in 2004.
WPP’s bleak outlook follows a raft of similar predictions from advertising rivals in recent weeks and analysts expect the agency sector to come under revenue and margin pressure for some years to come.
Despite the tough conditions, WPP pulled in £1.2billion of net new business billings in the first half.