Business

WPP benefits from market problems

  • 24 August 2011
  • From the section Business

The world's biggest advertising company, WPP, has said it has been benefiting from the market turmoil.

Chief executive Martin Sorrell said economic concerns meant that companies were too nervous to invest in factories and equipment and so were investing in their brands instead.

He told BBC News that the recent market falls may make the effect even more significant in 2012.

The company reported first half pre-tax profits rose 37% to £334.3m.

"Instead of investing in plant and equipment, companies are investing in brand and trying to build sales and market share," Mr Sorrell said.

WPP Chairman Sir Martin Sorrell on his company's profits

"The events of the last three or four weeks in the markets... may give us those perverse benefits even further as we go into 2012."

Analysts also identified ways that WPP could prosper in the coming year.

"Events such as the Olympics and the US Presidential elections may provide further opportunities for growth," said Richard Hunter at Hargreaves Lansdown Stockbrokers.

"In the meantime, WPP has shown the benefits of geographical diversification, whilst continuing to bolster its portfolio with selective acquisitions."

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