WPP beats market expectations

By Georgina Prodhan, European Media Correspondent

LONDON (Reuters) - Advertising group WPP (WPP.L) beat market expectations for first-half sales and profits and stuck to its full-year profit target on Friday although a slowdown that began in May continued in July.

WPP said it still aimed to raise its operating profit margin to 15.5 percent from 15.0 percent, after the margin rose by half a percentage point to 13.6 percent in the first half thanks to strict cost controls.

Sorrell said 2008 sales and billings should grow at a similar rate to 2007, when billings and like-for-like sales -- excluding currency and acquisition effects -- grew 5 percent.

But a slowdown in advertising spending driven by cooling developed economies that began in May has continued, Sorrell told Reuters by telephone. "July followed a similar pattern to the second quarter."

Sorrell reiterated his belief that Germany's GfK would not come up with an offer to better WPP's $2.2 billion (1.2 billion pounds) hostile bid for British marketing group Taylor Nelson Sofres TNS.L, but said: "I'm never confident until the fat lady sings."

Shares in WPP, the world's second-biggest advertising and marketing group behind Omnicom (OMC.N), rose 1.6 percent to 483 pence by 9.12 a.m., beating a 0.8 percent rise in the DJ Stoxx European media index .SXMP.

"While slower like-for-like growth will make these targets more difficult to deliver, we believe there is sufficient cost flexibility in the business that they are achievable in the absence of a dramatic, sharp slowdown," Numis analysts wrote.

WPP's first-half organic sales rose 4.3 percent to 3.339 billion pounds, beating analysts' consensus of 3.244 billion, driven by fast-growing economies in Asia, Latin America, Africa, the Middle East and central and eastern Europe.