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WPP sees profits rise to £532 million

Advertising giant WPP boosted profits and sales in the first six months of the year even though it said it had been "ravaged" by a strong pound.

The world's largest ad group said headline pre-tax profit was up 1.5% at £532 million as it grew business in the UK and US to offset weaker trading in continental Europe. Sales were 3% higher at £5.5 billion.

WPP, which employs over 179,000 staff, said it expected 2014 to be "another demanding year" as a strong pound impacted currencies in faster growing markets in Asia and South America.

The company, led by founder and chief executive Sir Martin Sorrell, said a fragile eurozone, an unstable Middle East, the US budget deficit, crisis in the Ukraine and political decisions in the UK over its membership of the EU and Scottish devolution all created business uncertainty.

WPP said this led its client firms to reach "profitability objectives by cutting costs, rather than by growing the top line."

The marketing services group added: "Advertising as a proportion of gross domestic production should at least remain constant overall, although it is still at relatively depressed historical levels, particularly in mature markets."

The group's UK agencies include Burson-Marsteller, Ogilvy and RLM Finsbury.

In today's results, WPP reported that billings - the amount an agency charges its clients - was down 3% at £22.1 billion. But once sterling translations are stripped out the figure rose 5.7%.

The group forecast like-for-like sales would grow at over 3% in 2014, compared to a 8.7% jump in the first half of the year.

In the UK the firm posted sales up 17.2% to £784 million as it grew in public relations and media investment management, which offset weaker sales among its data management and healthcare communications arms.

In the US, sales lifted 2.1% to £1.9 billion as its public affairs and public relations and data management arms performed well.

But in continental Europe half-year sales slipped 1.1% to £1.2 billion as difficult markets in countries such as Italy, Ireland and Switzerland offset strong growth in Spain, Portugal and the Netherlands.

Edison Investment Research analyst Fiona Orford-Williams said: "WPP's interim figures show the stark impact of currency shifts, but stripping these out, the progress is very encouraging."

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