Wpp Plc · LSE:WPP

Wpp — Q3 2011 Earnings Presentation

34 slides from Wpp's earnings presentation, October 2011

  1. Slide 1: Trading Statement for the Third Quarter 2011

    Trading Statement for the Third Quarter 2011 October 2011 1

  2. Slide 2: Summary

    Third Quarter 2011 Summary  Reported revenue up 9.0% with constant currency revenue up 8.5%.  Like-for-like revenue up 4.7% with gross margin up 5.5%.  Third quarter profits and margin continue ahead of budget, ahead of full year expectations and well ahead of last year.  Average net debt of £2.

  3. Slide 3: Summary – Revenue Growth

    Third Quarter 2011 Summary – Revenue Growth Third % change Quarter YTD Like-for-like: Gross Margin 5.5 6.4 Like-for-like: Revenue 4.7 5.6 Acquisitions 3.8 2.6 Constant currency 8.5 8.2 Foreign exchange 0.5 -1.1 Reportable sterling 9.0¹ 7.1 Reportable US dollars² 13.1 12.9 Reportable euros² 3.6 5.2 ¹

  4. Slide 4: Summary – Increasing Revenue Momentum

    Third Quarter 2011 Summary – Increasing Revenue Momentum1 % change 2010/09 2011/10 Combined Combined Gross margin Q1 0.0 6.7 6.7 7.5 Q2 4.7 5.6 10.3 10.6 Q3 7.5 4.7 12.2 13.0 1 Like-for-like quarterly revenue growth 4

  5. Slide 5: Revenue by Discipline: Third Quarter

    Third Quarter 2011 Revenue by Discipline: Third Quarter % Change Like-for-like 2011 2010 Reported Constant Revenue Gross £m £m Currency Margin Advertising, Media Investment 1,010.1 890.6 13.4 12.5 6.3 6.6 Management Consumer Insight 593.2 581.9 1.9 0.7 -0.2 1.2 Public Relations & Public Affairs 222.

  6. Slide 6: Revenue by Discipline: Year to Date

    Third Quarter 2011 Revenue by Discipline: Year to Date % Change Like-for-like 2011 2010 Reported Constant Revenue Gross £m £m Currency Margin Advertising, Media Investment 2,937.2 2,636.7 11.4 12.2 7.5 7.7 Management Consumer Insight 1,770.5 1,744.4 1.5 2.0 1.4 2.6 Public Relations & Public Affairs

  7. Slide 7: Organic Revenue Growth Trends by Discipline

    Third Quarter 2011 Organic Revenue Growth Trends by Discipline 2009-2011 Q3 Quarter by Quarter 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Advertising, Media Investment Management Branding & Identity, Healthcare and Specialist Communications Public Relat

  8. Slide 8: Advertising, Media Investment Management

    Third Quarter 2011 Advertising, Media Investment Management  Maintained strong performance of H1, with like-for-like growth of 6.3% in Third Quarter and 7.5% year-to-date.  Latin America, Asia Pacific and the United Kingdom well above the average. Some slow down in advertising in Third Quarter, wi

  9. Slide 9: Consumer Insight

    Third Quarter 2011 Consumer Insight  Consumer Insight below the Group average with like-for-like revenue growth flat and gross margin growth 1.2%.  The United States, the United Kingdom and Western Continental Europe difficult, but double digit like-for-like growth in Latin America and almost 9% i

  10. Slide 10: Public Relations & Public Affairs

    Third Quarter 2011 Public Relations & Public Affairs  Increasing momentum across the Group’s PR businesses with like-for-like revenue growth of 5.6% in the Third Quarter vs 4.7% in Second Quarter.  Geographically, double digit like-for-like growth in Asia Pacific, with above average growth in the

  11. Slide 11: Branding & Identity, Healthcare and Specialist Communications

    Third Quarter 2011 Branding & Identity, Healthcare and Specialist Communications  Continuing strong performance with like-for-like revenue growth of 6.8% in Third Quarter, following the strong like-for-like growth of 6.8% and 7.9% in the first two quarters of 2011.  Strong performances by the Grou

  12. Slide 12: Direct, Digital and Interactive

    Third Quarter 2011 Direct, Digital and Interactive  At 30 September 2011, Direct, Digital and Interactive revenues were $3.2bn or 29% of total revenues (2010: 28%).  Acquisition of businesses primarily in the USA – Global Market Insite, Lunchbox and Rockfish.  WPP Digital Investor Day held on 18

  13. Slide 13: Revenue by Region: Third Quarter

    Third Quarter 2011 Revenue by Region: Third Quarter % Change Like-for-like 2011 2010 Reported Constant Revenue Gross £m £m Currency Margin North America 837.4 819.5 2.2 5.6 1.7 2.7 UK 285.6 262.3 8.9 8.9 6.7 10.0 Western Continental Europe 587.7 519.5 13.1 7.6 1.3 2.1 Asia Pacific, Latin America, Af

  14. Slide 14: Revenue by Region: Year to Date

    Third Quarter 2011 Revenue by Region: Year to Date % Change Like-for-like 2011 2010 Reported Constant Revenue Gross £m £m Currency Margin North America 2,482.7 2,427.8 2.3 7.4 4.1 5.0 UK 845.8 785.4 7.7 7.7 5.7 9.2 Western Continental Europe 1,762.6 1,640.4 7.4 5.3 2.4 2.7 Asia Pacific, Latin Americ

  15. Slide 15: Organic Revenue Growth Trends by Region

    Third Quarter 2011 Organic Revenue Growth Trends by Region 2009-2011 Q3 Quarter by Quarter 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Asia Pacific, Latin America, Africa & Middle East, Central & Eastern Europe North America UK UK (GM) Western Continenta

  16. Slide 16: Growth by Region

    Third Quarter 2011 Growth by Region  Strong performance in the United Kingdom with like-for-like revenue growth of 6.7%.  Double digit like-for-like revenue growth in Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, following 11.5% and 9.6% in first two quart

  17. Slide 17: Revenue Growth by Country

    Third Quarter 2011 Revenue Growth by Country Revenue Growth1 Countries >20% Argentina, Greater China, Mainland China² 15% to 20% Brazil, Korea 10% to 15% Russia Australia, Belgium, Canada, India, Mexico, Netherlands, 5% to 10% Norway, Poland, Singapore, UK Denmark, France, Germany, Italy, Japan, Spa

  18. Slide 18: Revenue Growth by Category

    Third Quarter 2011 Revenue Growth by Category Revenue Growth1 Categories >20% Government 15% to 20% Automotive, Travel & Airline 10% to 15% Retail 5% to 10% Oil, Personal Care & Drugs,Telecommunications Computers, Drinks, Electronics, Entertainment, Financial <5% Services, Food 1 Like-for-like growt

  19. Slide 19: Effects of Currency

    Third Quarter 2011 Effects of Currency  Currency movements accounted for a 0.5% increase in revenue, largely reflecting the weakness of the £ sterling against the euro and most other currencies, partly offset by strength against the US$.  Sterling weaker on average as follows: Q3 2011 Q3 2010 Ster

  20. Slide 20: Trade Estimates of Major New Business Wins >$100m

    Third Quarter 2011 Trade Estimates of Major New Business Wins >$100m WPP Agency Incumbent Account Office Billings ($m) Maxus IPG SC Johnson Global 1,000 Maxus/MediaCom OMC/Ind Comcast NBCU Global 865 Ogilvy IPG SC Johnson Global 500 MediaCom PUB Procter & Gamble Japan 500 Ogilvy OMC Claro Brazil 500

  21. Slide 21: Trade Estimates of Major New Business Wins <$100m

    Third Quarter 2011 Trade Estimates of Major New Business Wins <$100m WPP Agency Incumbent Account Office Billings ($m) Mindshare IPG Unilever Australia 80 RKCR/Y&R PUB Vodafone UK 73 Y&R Ind/IPG Beeline Russia 70 MEC MediaCom T-Mobile UK 61 RKCR/Y&R Ind Dreams UK 55 VML PUB Kellogg’s USA 51 JWT HAV

  22. Slide 22: Trade Estimates of Major New Business Losses >$100m

    Third Quarter 2011 Trade Estimates of Major New Business Losses >$100m WPP Agency Winning Agency Account Office Billings ($m) MediaCom OMC Warner Bros USA 800 Mindshare PUB Burger King (resigned) USA 300 MEC PUB Pizza Hut USA 217 Ogilvy OMC TD Ameritrade USA 165 Mindshare/JWT PUB Tourism Ireland Glo

  23. Slide 23: Trade Estimates of Major New Business Losses <$100m

    Third Quarter 2011 Trade Estimates of Major New Business Losses <$100m WPP Agency Winning Agency Account Office Billings ($m) MEC OMC Sara Lee Asia Pacific 75 MediaCom MEC T-Mobile UK 61 Y&R IPG Sears USA 60 Y&R OMC Office Depot USA 60 Y&R OMC Accenture Global 50 MEC Ind Toshiba USA 50 Y&R Ind Hilto

  24. Slide 24: Internal Estimates of Net New Business Wins – Third Quarter

    Third Quarter 2011 Internal Estimates of Net New Business Wins – Third Quarter ($m) Creative Media Total Advertising 670 1,297 1,967 Other Businesses 322 - 322 Total 992 1,297 2,289 24

  25. Slide 25: Trade Estimates of Major New Business Wins/Losses Since October

    Third Quarter 2011 Trade Estimates of Major New Business Wins/Losses Since 1 October WPP Agency Incumbent Account Office Billings ($m) JWT n/a Johnson & Johnson Global 100 MEC AGS/PUB Marriott Global 80 WINS MediaCom OMC Westpac Australia 70 Maxus AGS Pfizer China 31 Y&R/Taxi IPG Kraft Gevalia USA 2

  26. Slide 26: Cash Flow and Net Debt

    Third Quarter 2011 Cash Flow and Net Debt  Average net debt in the first nine months down £332 million or $531 million to £2.737 billion, compared to £3.069 billion in 2010, at 2011 exchange rates.  Acquisitions (including earnouts) and share buy-backs totalled £588 million in nine months to 30 Se

  27. Slide 27: Acquisitions and Investments – Year to Date

    Third Quarter 2011 Acquisitions and Investments – Year to Date Faster Growing Quantitative and Markets Digital AFFECTIVA (USA)² DATACORE (USA)¹ A4A4 ECOMMERA (UK)² CBC II (China)² gkk (Germany)3 f.biz (Brazil) GLOBAL MARKET INSITE (USA) Arcay (South Africa)4 Gringo (Brazil) I-BEHAVIOR (USA)¹ C&G (PH

  28. Slide 28: Other Acquisitions – Year to Date

    Third Quarter 2011 Other Acquisitions – Year to Date Advertising JMI (USA) Scholz & Friends(Germany)2 St. John & Partners (USA) Y&R France¹ Public Relations & Public Affairs Chime (UK)1 Quill (UK) ¹ Step-ups in investments, associates and subsidiaries’ equity 2 Division of Commarco GmbH CAPITALS ARE

  29. Slide 29: Uses of Free Cash Flow

    Third Quarter 2011 Uses of Free Cash Flow Category Sept YTD 2011 Sept YTD 2010 FY 2010 New acquisitions¹ £291m² £26m² £97m² Share purchases: £161m £29m £46m % of issued share capital 1.8% 0.4% 0.5% Dividend increase 25% 15% 15% ¹ Includes investments and step-ups in subsidiaries equity. ² Net of dis

  30. Slide 30: Summary

    Third Quarter 2011 Summary  Strong revenue and gross margin growth in quarter with continued momentum, particularly over combined two years.  Slowdown in USA and Western Continental Europe as predicted.  Consumer Insight strong profit and operating margin performance but not on revenue.  Variabl

  31. Slide 31: Outlook

    Third Quarter 2011 Outlook  Faster growing markets will hold up well and should contribute over 75% of absolute organic growth.  Western Continental Europe and USA to continue low growth with Media Investment Management and Digital, Direct and Interactive strongest disciplines.  Preliminary Q3RF

  32. Slide 32: Summary – Increasing Revenue Momentum

    Third Quarter 2011 Summary – Increasing Revenue Momentum1 % change 2010/09 2011/10 Combined Combined Gross Margin Q1 0.0 6.7 6.7 7.5 Q2 4.7 5.6 10.3 10.6 Q3 7.5 4.7 12.2 13.0 Q4 8.6 3-4 11.5-12.5 12-13 1 Like-for-like quarterly revenue growth 32

  33. Slide 33: Conclusion

    Third Quarter 2011 Conclusion  The Group is well placed as we begin preparations for 2012, with: – high level of variable costs – headcount growth below revenue growth – costs well controlled and operating margin rising  The trends in Faster Growing Markets and Digital support our revenue goal of

  34. Slide 34: Trading Statement for the Third Quarter 2011

    Trading Statement for the Third Quarter 2011 October 2011 34

WPP — Q3 2011 Earnings Presentation on 6ix