WPP AUNZ has reported flat earnings in its first half-yearly results announcement since the merger of WPP and STW Group in April of this year.
Earnings before interest and tax (EBIT) dropped marginally to $47.2 million from $47.4 million in the prior year result.
Headline net sales fell by a similar margin to $407.3 million, compared to $407.5 million year on year.
As WPP and STW Group had its merger approved by shareholders on 4 April, the group's headline results are presented on a like-for-like basis, as if all businesses were owned from 1 January and exclude one-off and significant items incurred during the period.
While noting that the merger is at its initial stages, WPP AUNZ CEO Michael Connaghan says it has already had a very positive start.
“There has been strong engagement and collaboration from local business unit and support from WPP global operations,” Connaghan says. “The substantial benefits of the merger are tangible, providing the group with access to new tools, technologies and client relationships.
“2016 will be a year of integration and establishing a platform for 2017 and beyond.”
WPP AUNZ also provided its guidance to the market, noting it expects headline profit before interest and tax of between $140 million and $147 million, an increase from the 2015 result of $137 million.
While the group warned it expects a flat media market for the rest of the year, Connaghan says mid-to-high single digital organic growth is still achievable.
“We are cautious in our outlook for the group given a flat media market, restrained client spend and a subdued macro-economic environment in key markets,” Connaghan says.
“The group will achieve this organic growth through winning market share and driving cost efficiencies.”
The group also pointed to synergies it expects from the merger of the two businesses. Previously, WPP AUNZ outlined that it expected $15 million in annual cost synergies over three years.
Following the completion of the merger, Connaghan notes the group now has “enhanced confidence in reaching and exceeding projected synergy targets”, but expects there to be ”limited synergy benefits” in 2016.
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