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WPP's ability to win new business was highlighted on Friday as the advertising group reported a 15 per cent jump in second-half pre-tax earnings and raised its profit-margin forecast for this year.

Sir Martin Sorrell, chief executive, was typically cautious in discussing the results, saying that he was growing "a little bit more confident" about the advertising market. WPP reported ?311.8m in second-half earnings before taxes, interest and accounting adjustments, up 15 from ?270.5m last year. Revenue was ?2.3bn, up nearly 4 per cent from ?2.2bn.

The group said it believed that it could achieve an operating-profit margin of least 14.3 per cent this year and 14.8 per cent in 2006. Both estimates include the $1.5bn acquisition of US rival Grey Global, which is expected to be completed in March.

After announcing the Grey deal in September, WPP had said it expected operating-profit margins of 14 per cent in 2005 and 14.5 per cent in 2006. Operating margin rose to 14.1 per cent last year, up from 13 per cent in 2003.

The company's growing confidence reflected its ability to win business - particularly from its leading competitors, such as Interpublic of the US.

Net new business billings hit a record figure of ?3.9bn in 2004, as WPP brought in more net new accounts during the second half of the year than it had in the whole of 2003.

However, Sir Martin acknowledged that he has concerns about the competitive position of one part of his group.

WPP's Young & Rubicam advertising agency has lost $100m accounts this month with both Ford's Jaguar unit and Sony Electronics. "Young & Rubicam advertising has to raise its game and we are taking actions to try to improve that level of success," Sir Martin commented. "They have had some disappointments."

WPP shares rose 20?p, or 3.3 per cent, to 606p. From 463?p last August, the shares are now approaching their 52-week high of 644p, which was reached on February 27 last year.

Sir Martin was asked by analysts whether he might move WPP's listing to the US to improve its valuation, but he replied that such a move would impractical for tax reasons.

Copyright The Financial Times Limited 2017. All rights reserved.
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