Wpp Plc · LSE:WPP
Wpp — Q3 2024 Earnings Presentation
28 slides from Wpp's earnings presentation, Oct 23, 2024
Slide 1: Q3 Trading Update
Q3 TRADING UPDATE 23 October 2024
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This document contains statements that are, or may be shifts in industry rates of compensation; regulatory compliance conditions and government regulations in the world’s deemed to be, “forward-looking statements”. Forward- costs or litigatio
Slide 3: Agenda
• Q3 highlights • Financial performance • Strategic progress • Q&A 3
Slide 4: Q3 Highlights
Q3 HIGHLIGHTS • Growth in Q3 ‘24 +0.5% LFL1 (Q3 ‘23 -0.6%): • Growth in N. America, Western Continental Europe and India. Ongoing pressure in China • GroupM improved sequentially +4.8% (H1 +1.9%) • Technology sector client spending stabilising +1.3% (H1 -5.1%) • Strategic progress: • WPP Open increa
Slide 5: Financial Performance
FINANCIAL PERFORMANCE
Slide 6: Revenue Less Pass-Through Costs Q3 2024
REVENUE LESS PASS-THROUGH COSTS Q3 2024 -2.6% -2.9% -0.2% +0.5% Reported growth FX contribution to M&A contribution to Like-for-like growth (-5.0% in Q3 ‘23) reported growth reported growth (-0.6% in Q3 ‘23) 6
Slide 7: Performance by Business
PERFORMANCE BY BUSINESS LFL REVENUE LESS PASS-THROUGH COSTS GROWTH (%)1 • GLOBAL INTEGRATED AGENCIES • GroupM: significant QoQ Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 improvement reflects an easier comp with good YoY growth from existing 5.7 4.8 and new clients and China weakness 2.4 2.4 • Integrate
Slide 8: Performance by Region
PERFORMANCE BY REGION LFL REVENUE LESS PASS-THROUGH COSTS GROWTH (%) 5.1 5.3 3.3 2.8 2.0 1.7 2.2 1.1 0.3 1.1 0.3 0.0 (0.8) (0.6) (2.2) (2.2) (4.1) (4.1) (5.2) (5.3) Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 N. America UK W. Continental Europe RoW 39% OF WPP1 14% OF WPP1 21% OF WPP1 26% OF WPP1 • N. Am
Slide 9: Client Mix
CLIENT MIX LFL REVENUE LESS PASS-THROUGH COSTS Q3 ’24 (YTD)1 4% 3% 5% Telecoms, media & 6% 28% CPG +7.6% (YTD +7.3%) entertainment -2.3% (YTD +3.3%) Financial services +5.3% (YTD Tech & digital services +1.3% +2.2%) 7% (YTD -3.1%) Healthcare & pharma -7.7% Other -15.4% (YTD -15.3%) (YTD -8.6%) Trave
Slide 10: Movement in Net Debt
MOVEMENT IN NET DEBT £BN SEP ‘23 DEC ‘23 SEP ‘24 Adjusted net debt1,2 (3.9) (2.5) (3.6) • At Q3 net debt was £0.3bn lower year-on-year, driven by lower M&A spend Average adjusted net debt1,3 (3.5) (3.6) (3.6) • 2024 working capital guidance Average adjusted net debt/headline unchanged: expected to b
Slide 11: 2024 Guidance
2024 GUIDANCE LFL revenue less pass-through costs growth of -1% to 0% Headline operating margin improvement of 20-40bps at constant currency OTHER FY 2024 FINANCIAL INDICATIONS: • Mergers and acquisitions will have a slightly negative impact to revenue less pass-through costs growth, primarily due t
Slide 12: Strategic Progress
STRATEGIC > PROGRESS
Slide 13: Strategic Progress Since January
STRATEGIC PROGRESS SINCE JANUARY Restructuring towards a Scaling adoption of FGS Global sale to much simpler company WPP Open strengthen balance sheet and provide flexibility1 Simpler operating model, Media Studio, Driving new client assignments $1.7 billion valuation new leadership c.£604m Strong e
Slide 14: Summary
SUMMARY Good progress Significant client on strategy Q3 performance Reiterating 2024 assignment outlined at the as expected guidance wins CMD in January Q1 likely to be the most challenging of the year Confident the actions we are taking will accelerate WPP’s growth and deliver our medium-term finan
Slide 15: Q&A
Q&A
Slide 16: Contacts and Further Resources
CONTACTS AND FURTHER RESOURCES TOM WALDRON INVESTOR WEBSITE Group Investor Relations Director wpp.com/investors tom.waldron@wpp.com Tel: +44 (0) 7788 695 864 CAPITAL MARKETS DAY 2024 Materials linked here ANTHONY HAMILTON Investor Relations Director INVESTOR WEBINARS anthony.hamilton@wpp.com A serie
Slide 17: Appendix
APPENDIX
Slide 18: Revenue Less Pass-Through Costs Growth by Region
REVENUE LESS PASS-THROUGH COSTS GROWTH BY REGION LIKE-FOR-LIKE % Central & Eastern Europe % Q1 ‘24 Q2 ’24 Q3 ’24 (0.1) 3.4 4.4 UK % Q1 ’24 Q2 ’24 Q3 ’24 0.3 (5.3) 0.0 North America % Q1 ‘24 Q2 ’24 Q3 ’24 (5.2) 2.0 1.7 Western Continental Europe % Q1 ’24 Q2 ’24 Q3 ’24 3.3 0.3 2.2 Asia Pacific % Q1 ‘2
Slide 19: Like-for-Like Growth: Top Markets (USA, UK, Germany, China, India)
LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH TOP MARKETS USA UK GERMANY Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 20% 20% 20% 15% 15% 15% 10% 10% 10% 5.1% 5% 2.6% 5% 5% 1.9% 1.1% 1.4% 0.3% 0.0% - - - (5%) (5%) (5%) (1.9%) (4.2%)
Slide 20: Like-for-Like Growth: Top Markets (Brazil, Australia, Canada, Spain, France)
LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH TOP MARKETS BRAZIL AUSTRALIA CANADA Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 20% 20% 20% 15% 15% 15% 10% 10% 10% 5% 5% 2.3% 5% 0.5% 1.4% - - - (0.9%) (0.9%) (0.8%) (0.3%) (0.2%) (1.4%
Slide 21: Exchange Rate Analysis
EXCHANGE RATE ANALYSIS STERLING IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS GROWTH THIRD QUARTER 2024 2023 (WEAKER)/STRONGER US$ 1.30 1.27 2.4% Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 € 1.18 1.16 1.7% Chinese Renminbi 9.32 9.17 1.6% (1.9%) Indian Rupee 108.9 104.7 4.0% (2.9%) Brazilian Real 7.21 6.18
Slide 22: Debt Maturity Profile
DEBT MATURITY PROFILE AT SEPT 30 2024 (£M) Bonds post swaps EUR GBP USD £ Total £ Total Bonds (currency of issuance) Credit Drawn 700 n £ bonds £400m (2.875% Sep ’46) 400 400 n US bond $220m (5.625% Nov ’43) 600 164 164 n US bond $93m (5.125% Sep ’42) 70 70 500 n Eurobonds €650m (4.0% Sept ’33) 1 55
Slide 23: New Business
NEW BUSINESS RECENT NEW CLIENT ASSIGNMENTS1,2 Media Media Media Media Media3 AOR Commerce EMEA, APAC Global Global Europe EMEA Europe Creative Creative Creative Creative Creative PR Global Beauty and Global Oncology Global US Agency of Record Global Wellbeing 1. Includes new clients and expanded sco
Slide 24: World Class Brands: VML
WORLD CLASS BRANDS: VML SIZE AND SCALE STRATEGIC PROGRESS MAJOR NEW CLIENT #1 CONNECTED CREATIVITY OPERATIONAL EFFICIENCY ASSIGNMENTS/WINS The world’s largest creative agency Market synergies SIMPLIFIED WPP OFFERING Integrated enterprise VML, Y&R, Wunderman and J Walter Thompson technology solutions
Slide 25: World Class Brands: Burson
WORLD CLASS BRANDS: BURSON SIZE AND SCALE STRATEGIC PROGRESS ACCELERATED AWARD-WINNING NEW CLIENT Top 2 INNOVATION WORK ASSIGNMENTS PR firm SIMPLIFICATION Launch of 8 APAC SABRES Three months into the merger of “PR Studios” in BCW + Hill & Knowlton to create a new WPP Open, IKEA communications power
Slide 26: World Class Brands: GroupM
WORLD CLASS BRANDS: GROUPM SIZE AND SCALE STRATEGIC PROGRESS NEW LEADERSHIP SIMPLIFICATION NEW CLIENT #1 TALENT ASSIGNMENTS The world’s largest media agency ($63bn billings)1 #1 in EMEA and APAC, #2 in N. America New CEO A simpler Go-to- Brian Lesser Market offer powered by Media Studio New Senior h
Slide 27: Medium-Term Financial Framework
MEDIUM-TERM FINANCIAL FRAMEWORK 3%+ 16%-17% 85%+ 1.5-1.75x Organic growth Headline Adjusted Operating Cash Average Net Debt / Revenue less pass- Operating Margin Flow Conversion Headline EBITDA1 through costs DISCIPLINED CAPITAL ALLOCATION Potential for M&A to accelerate growth by up to 1% p.a. 1. A
Slide 28: Thank You
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