The 17% slide in first-half profits before goodwill amortisation and impairment forced pre-tax earnings down to £210.4m. Underlying revenues fell by 8%.
Merrill Lynch cut its price target for WPP to 700p from 760p. The bank also cut its margin forecast, but said it was keeping an intermediate term "buy" rating on WPP.
WPP shares have continued to fall this morning. In early trading they were down by 4.5%, but by 12:30 they had dropped further falling to 7.81% to 464p.
WPP added to the industry gloom this morning when it said it still saw no signs of immediate recovery and dumped its operating margin target of 15% this year, warning that last year's level of 14% would be difficult to achieve.
In a statement WPP reaffirmed chief executive Sir Martin Sorrell's view that recovery will not arrive until 2004, said: "It seems unlikely that significantly improved performance will occur in 2002 and that any recovery will have to await 2003 or, perhaps, even more likely 2004."
WPP, which owns the Ogilvy & Mather, J. Walter Thompson and Young & Rubicam global advertising networks, added that "stock market declines in the past few months have heightened concerns about corporate profitability and consumer confidence and have raised the possibility of an economic 'double-dip' recession".
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