Q1 performance in line with expectations. 2024 guidance reiterated. Strong progress on strategic initiatives across Burson, GroupM and VML
Key figures
First Quarter |
£ million |
‘+/(-) %
|
‘+/(-) %
|
|||
Revenue |
3,412 |
(1.4) |
2.1 |
|||
Revenue less pass-through costs |
2,687 |
(5.0) |
(1.6) |
- Q1 revenue -1.4%; LFL revenue +2.1%
-
Q1 LFL revenue less pass-through costs -1.6% (Q1 2023: +2.9%) with growth in the
UK and Western Continental Europe offset by declines inNorth America andAsia Pacific , which saw strong growth inIndia offset by a decline inChina
- Global Integrated Agencies revenue less pass-through costs declined 0.7%, with 2.4% growth in GroupM offset by a 3.3% decline at integrated creative agencies with the loss of assignments at a healthcare client and reduced spend at technology companies
-
New client assignment wins from AstraZeneca,
Canon , Molson Coors, Daiichi Sankyo, Nestlé, Perfetti, Perrigo, Rightmove and Telefónica. Q1 net new billings of$0.8bn (Q1 2023:$1.5bn )
- Strong progress on the strategic initiatives laid out at our CMD in January. Burson, GroupM and VML on track to deliver targeted in-year savings and well-placed to benefit from a strong pipeline
-
Continued strategic progress on AI initiatives. WPP Open adopted by over 50,000 of our people and at the heart of Nestlé
Oceania ,ASEAN and Nestlé Health Science US wins. Collaboration withGoogle to integrate Gemini 1.5 Pro in WPP Open announced in April.WPP named NVIDIA Industry Innovation Partner of the Year in EMEA
- 2024 guidance reiterated: LFL revenue less pass-through costs growth expected to be 0-1%; with headline operating margin improvement of 20-40bps (excluding the impact of FX)
“The first quarter of 2024 was very much in line with our expectations with performance reflecting the toughest comparator of the year.
“Strategically, we have progressed well on the priorities set out at our Capital Markets Day at the end of January. We’ve rolled out multiple AI tools through our intelligent marketing operating system WPP Open, including the latest foundation models from Bria,
“Structurally, VML is now well established and is on track to deliver savings. GroupM is progressing well with its simplification and Burson will be operational in July. I’m very pleased with the progress we are making and we are already seeing the benefits of a simpler and more agile structure for our clients.
“Our outlook for the full year is reiterated. We remain on track to return to growth in the balance of the year, supported by an encouraging new business pipeline and the strength of our business creatively and in media, both powered by new AI capabilities, while our simpler structure will drive organisational flexibility and stronger cash conversion.”
Overview
Revenue in the first quarter was £3.4bn, down 1.4% from £3.5bn in Q1 2023, and up 2.1% like-for-like. Revenue less pass-through costs was £2.7bn, down 5.0% from £2.8bn in Q1 2023, and down 1.6% like-for-like.
£ million |
Q1 2024 |
%
|
%
|
%
|
%
|
|||||
Revenue |
3,412 |
(1.4) |
(4.2) |
0.7 |
2.1 |
|||||
Revenue less pass-through costs |
2,687 |
(5.0) |
(3.9) |
0.5 |
(1.6) |
Business segment review3 - revenue less pass-through costs
£ million |
Q1 2024 |
Q1 2023 |
+/(-) %
|
+/(-) % LFL |
||||
Global Integrated Agencies |
2,202 |
2,305 |
(4.5) |
(0.7) |
||||
Public Relations |
276 |
292 |
(5.5) |
(3.3) |
||||
Specialist Agencies |
209 |
232 |
(9.9) |
(7.6) |
||||
|
2,687 |
2,829 |
(5.0) |
(1.6) |
Global Integrated Agencies: GroupM, our media planning and buying business, saw growth in revenue less pass-through costs of 2.4% in Q1 (Q1 2023: +6.1%), with continued growth in client investment in media, partially offset by the impact of US client assignment losses from prior years and lower spending by technology clients.
Other Global Integrated Agencies declined 3.3% (Q1 2023: +0.7%), also impacted by lower year-on-year spending by technology clients and the first full quarter impact of the loss of Pfizer creative assignments. Against that backdrop, VML and AKQA declined in the quarter, with continued growth at Hogarth and Ogilvy, supported by recent client wins.
Public Relations: BCW and Hill & Knowlton, which together will merge to form Burson in July, saw a combined decline due to the loss of Pfizer assignments and the impact of macroeconomic uncertainty on client spending. FGS Global grew against a tough comparison.
Specialist Agencies:
Landor,
Regional review - revenue less pass-through costs
£ million |
Q1 2024 |
Q1 2023 |
+/(-) %
|
+/(-) % LFL |
||||
|
1,055 |
1,150 |
(8.3) |
(5.2) |
||||
|
383 |
377 |
1.6 |
0.3 |
||||
W Cont. |
556 |
558 |
(0.4) |
3.3 |
||||
AP, LA, AME, CEE |
693 |
744 |
(6.9) |
(0.6) |
||||
|
2,687 |
2,829 |
(5.0) |
(1.6) |
The
Rest of World declined 0.6% primarily due to a decline in
There was continued growth in
Top five markets - revenue less pass-through costs
% LFL +/(-) |
|
|
|
|
|
|||||
Q1 2024 |
(5.4) |
0.3 |
(1.9) |
(15.4) |
6.6 |
Client sector review
Client sector - revenue less pass-through costs
Q1 2024 |
% share, revenue
|
% LFL +/(-) |
||
CPG |
28.0 |
9.5 |
||
Tech & Digital Services |
17.1 |
(9.0) |
||
Healthcare & Pharma |
11.6 |
(8.2) |
||
Automotive |
10.6 |
(0.7) |
||
Retail |
8.9 |
(9.1) |
||
Telecom, |
6.8 |
6.8 |
||
Financial Services |
6.2 |
(0.9) |
||
Other |
4.7 |
(14.8) |
||
Travel & Leisure |
3.7 |
4.0 |
||
Government, Public Sector & Non-profit |
2.4 |
(6.6) |
Operating and strategic progress
Lead through AI, data and technology
At the Capital Markets Day in January,
In April,
Accelerate growth through the power of creative transformation
Creativity is what sets
During the quarter,
Ogilvy was named the 2024 Global Agency Network of the Year by Ad Age and also topped both the WARC Effective 100 and Creative 100 rankings. VML was third in the WARC Creative 100. Mindshare New York was named the number one media agency in the WARC Effective 100 rankings.
VML’s ‘Waiting to Live’ campaign with
At this year’s
Build world-class, market-leading brands
Good progress has been made on each of our strategic initiatives with integration and cost actions relating to VML expected to be broadly complete in early Q2. The GroupM simplification and Burson merger also remain on track.
Across all three agencies, we have a strong pipeline of new business and we are encouraged by conversion in Q1. VML won a global assignment for Perrigo and aUS assignment from Daiichi Sankyo and AstraZeneca for their medicine Enhertu in breast cancer. GroupM won Nestlé
GroupM agency Wavemaker was named the number one global media agency network in the COMvergence Final 2023 Global New Business Barometer with a total new business value of
Execute efficiently to drive financial returns through margin and cash
As well as the initiatives above we are making good progress against our enterprise IT roadmap and workforce optimisation across finance and IT.
In the
Our cloud migration continues at pace with over 50% of legacy on-premise workloads migrated to the cloud by the end of Q1, with three more data centres closed in
No new campuses were opened in the quarter, but several new campus openings are planned for the second half of 2024.
Purpose and ESG
WPP’s purpose is to use the power of creativity to build better futures for our people, planet, clients and communities. Read more on the ways
Balance sheet highlights
Average adjusted net debt in the first three months of 2024 was £3.5bn, compared to £3.4bn reported in the first quarter of 2023, with no material impact from FX.
Adjusted net debt at
In March,
Outlook
We are reaffirming our guidance for 2024 as follows:
Like-for-like revenue less pass-through costs growth of 0-1%.
|
Other 2024 financial indications:
- Mergers and acquisitions will add 0.5-1.0% to revenue less pass-through costs growth
-
FX impact: current rates (at
19 April 2024 ) imply a c.1.1% drag on FY 2024 revenue less pass-through costs, with no meaningful impact expected on FY 2024 headline operating margin - Headline income from associates and non-controlling interests at similar levels to 2023
- Net finance costs of around £295m
- Effective tax rate (measured as headline tax as a % of headline profit before tax) of around 28%
- Capex of around £260m
- Cash restructuring costs of around £285m
- Working capital expected to be broadly flat year-on-year
Medium-term targets
In
- 3%+ LFL growth in revenue less pass-through costs
- 16-17% headline operating profit margin
- Adjusted operating cash flow conversion of 85%+5
Cautionary statement regarding forward-looking statements
This document contains statements that are, or may be deemed to be, “forward-looking statements”. Forward-looking statements give the Company’s current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or current facts.
These forward-looking statements may include, among other things, plans, objectives, beliefs, intentions, strategies, projections and anticipated future economic performance based on assumptions and the like that are subject to risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as ‘aim’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘forecast’, ‘guidance’, ‘intend’, 'may', ‘will’, ‘should’, ‘potential’, ‘possible’, ‘predict’, ‘project’, ‘plan’, ‘target’, and other words and similar references to future periods but are not the exclusive means of identifying such statements. As such, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the Company. Actual results or outcomes may differ materially from those discussed or implied in the forward-looking statements. Therefore, you should not rely on such forward-looking statements, which speak only as of the date they are made, as a prediction of actual results or otherwise. Important factors which may cause actual results to differ include but are not limited to: the impact of epidemics or pandemics including restrictions on businesses, social activities and travel; the unanticipated loss of a material client or key personnel; delays or reductions in client advertising budgets; shifts in industry rates of compensation; regulatory compliance costs or litigation; changes in competitive factors in the industries in which we operate and demand for our products and services; changes in client advertising, marketing and corporate communications requirements; our inability to realise the future anticipated benefits of acquisitions; failure to realise our assumptions regarding goodwill and indefinite lived intangible assets; natural disasters or acts of terrorism; the Company’s ability to attract new clients; the economic and geopolitical impact of the conflicts in
Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation, the
Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors on the date of this document.
___________________ |
1. Percentage change in reported sterling. |
2. Like-for-like. LFL comparisons are calculated as follows: current year, constant currency actual results (which include acquisitions from the relevant date of completion) are compared with prior year, constant currency actual results from continuing operations, adjusted to include the results of acquisitions and disposals for the commensurate period in the prior year. Throughout the commentary in this release growth rates are LFL unless stated otherwise. |
3. Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Specialist Agencies. |
4. Proportion of |
5. Adjusted operating cash flow divided by headline operating profit. |
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