WPP warns of more ad gloom

LONDON, England (CNN) -- WPP Group, the world's biggest advertising group, warned on Tuesday the industry would not recover until next year from the current slump in ad spenidng and said profit slid more than 30 percent.

The advertising industry is going through its worst recessions in history as companies cut back on spending amid sluggish global economic growth. The company's net income slid to £114.3 million ($175 million) in the first-half of the year, from £167.3 million a year ago.

"It's still very difficult out there," Martin Sorrell, chief executive of WPP, told CNN. "The recession that began in the United States has spread to Europe, Asia and Latin America.

"We have to wait until 2003 and may be 2004 for any sign of recovery when the U.S. Presidential Election and the Athens Olympic games begin before4 some impovement."

The company's stock fell 4.8 percent to 476 pence in early London trading on Tuesday after the company also announced plans to abandon its operating margin target of 15 percent this year and said last year's level of 14 percent would be difficult to achieve.

"In the 90s we had nine, ten years of unprecedented growth and this period is painful. It's the penalty or fine for strong growth during the 1990s," said Sorrell.

WPP, home to three top-tier global agency networks -- Ogilvy & Mather, J. Walter Thompson and Young & Rubicam -- posted a 17 percent slide in first-half pre-tax profit before goodwill amortisation to £210.4 million, broadly inline with analysts expectations. Underlying revenues fell over eight percent.

Despite the gloom, the company managed to pull in 1.2 billion of new business billings in the first half.