Wpp Plc · LSE:WPP
Wpp — Q1 2019 Earnings Presentation
26 slides from Wpp's earnings presentation, Apr 26, 2019
Slide 1: First Quarter 2019 Trading Update
FIRST QUARTER 2019 TRADING UPDATE London 26 APRIL 2019 FIRST QUARTER 2019 TRADING UPDATE 1
Slide 2: Safe Harbour Statement
SAFE HARBOUR STATEMENT In order to utilise the ‘safe harbour’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’), WPP plc is providing the following cautionary statement. This presentation contains certain forward-looking statements – that is, statements r
Slide 3: First Quarter 2019 Trading Update agenda
FIRST QUARTER 2019 TRADING UPDATE PROGRESS ON STRATEGY CONCLUSION AND Q&A FIRST QUARTER 2019 TRADING UPDATE 3
Slide 4: Introduction
INTRODUCTION • Continue to make good progress implementing our 3 year strategy to return WPP to sustainable growth • As anticipated, first quarter trading update reflects impact of certain significant 2018 client losses, particularly in USA • Financial guidance for full year unchanged • Newly formed
Slide 5: FIRST QUARTER 2019 TRADING UPDATE
FIRST QUARTER 2019 TRADING UPDATE FIRST QUARTER 2019 TRADING UPDATE 5
Slide 6: First Quarter 2019 Highlights
FIRST QUARTER 2019 HIGHLIGHTS • Reported revenue £3.588B up 0.9%, like-for-like -1.3% • Reported revenue less pass-through costs £2.926B -0.7%, like-for-like -2.8% • North America like-for-like revenue less pass-through costs -8.5%, weakest performing region, although in line with budgets, due to co
Slide 7: Revenue Less Pass-Through Costs Growth vs Prior Year
REVENUE LESS PASS-THROUGH COSTS GROWTH VS PRIOR YEAR Like-for-like -2.8% Acquisitions 0.5% FX 1.6% Reported -0.7% FIRST QUARTER 2019 TRADING UPDATE 7
Slide 8: Impact of FX on Revenue Less Pass-Through Costs
IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS 2018 FY ACT 2019 Q1 ACT 2019 Q2 EST 2019 Q3 EST 2019 Q4 EST 2019 FY EST 2% • 2019 Q1 currency 1% 1.6% tailwind 1.6% 0.9% 0.1% • 2019 expected 0% currency neutral at -0.8% latest exchange rates -1.2% • 2018 full year -1% headwind 2.8% -2.8% -2% -3% FIRS
Slide 9: Revenue Less Pass-Through Costs by Region
REVENUE LESS PASS-THROUGH COSTS BY REGION Δ CONSTANT Δ LIKE- % GROUP 2019 £M 2018 £M Δ REPORTED CURRENCY FOR-LIKE North America 35.6 1,043 1,055 -1.2% -7.3% -8.5% UK 13.7 400 405 -1.1% -1.1% -0.9% Western Continental Europe 21.1 616 626 -1.6% 0.2% -0.3% Asia Pacific, Latin America, Africa & Middle 2
Slide 10: Revenue Less Pass-Through Costs Growth by Region
REVENUE LESS PASS-THROUGH COSTS GROWTH BY REGION LIKE-FOR-LIKE % C. & E. Europe % FY/18 Q1/19 6.9 5.0 UK % FY/18 Q1/19 -0.5 -0.9 North America % FY/18 Q1/19 W. Cont. Europe % -4.2 -8.5 FY/18 Q1/19 2.0 -0.3 Asia Pacific % FY/18 Q1/19 1.2 1.4 Africa & M. East % FY/18 Q1/19 -3.1 -4.7 Latin America % FY
Slide 11: Major Markets
MAJOR MARKETS USA UK Germany Greater China² France REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2019 Q1 -8.8% -0.9% 0.4% 4.5% -1.5% 2018 FY -4.2% -0.5% 0.0% 2.1% 0.1% 1. Like-for-like growth vs prior year 2. Includes Hong Kong and Taiwan FIRST QUARTER 2019 TRADING UPDATE 11
Slide 12: BRIC Markets
BRIC MARKETS Mainland China Greater China² Brazil India Russia REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2019 Q1 6.6% 4.5% 8.6% 9.3% -1.1% 2018 FY 2.6% 2.1% 5.6% 5.5% 1.3% 1. Like-for-like growth vs prior year 2. Includes Hong Kong and Taiwan FIRST QUARTER 2019 TRADING UPDATE 12
Slide 13: Revenue Less Pass-Through Costs by Sector
REVENUE LESS PASS-THROUGH COSTS BY SECTOR Δ CONSTANT Δ LIKE- % GROUP 2019 £M 2018 £M Δ REPORTED CURRENCY FOR-LIKE Advertising and Media Investment 42.5 1,244 1,290¹ -3.6% -4.7% -4.8% Management Data Investment Management 15.6 456 455 0.3% 0.3% 0.1% Public Relations & Public Affairs 9.2 270 263 2.7%
Slide 14: Trade Estimates of Assignment Wins
TRADE ESTIMATES OF ASSIGNMENT WINS¹ MEDIA (M)/ WPP AGENCY CREATIVE (C) INCUMBENT ACCOUNT OFFICE BILLINGS $M MediaCom M OMC Signet N. America 360 Wavemaker M OMC Huawei China 350 Mindshare M DEN/PUB KangShiFu Drinks China 145 Wunderman Thompson C N/A Duracell International 100 Mindshare M N/A GSK Ind
Slide 15: Net Debt
NET DEBT 31 MARCH YTD: 2019 £M 2018 £M Δ £M Average net debt on constant currency basis (4,163) (4,875) 712 Average net debt on reportable basis (4,163) (4,773) 610 Net debt at 31 March on constant currency basis (4,624) (5,500) 876 Net debt at 31 March on reportable basis (4,624) (5,343) 719 FIRST
Slide 16: Uses of Free Cash Flow
USES OF FREE CASH FLOW FY MARCH YTD MARCH YTD FY TARGET 2019 2018 2018 (Disposals)/acquisitions (excluding earnouts): Acquisitions¹ C. £200M £18M £80M £288M Less disposals² C. £(200M) £(179M) £(44M) £(849M) Net (disposals)/acquisitions NEUTRAL £(161M) £36M £(561M) Share buy-backs: - - £145M £207M %
Slide 17: Disposal Proceeds
DISPOSAL PROCEEDS Q1 2019 £M Property - 3 Columbus Circle, New York City 157 Sale of other investments and associates 22 Total 179 FIRST QUARTER 2019 TRADING UPDATE 17
Slide 18: Outlook
OUTLOOK Our 2019 financial targets remain as: • Like-for-like revenue less pass-through costs -1.5% to -2.0%, with stronger headwinds in first half, due to client assignment losses in latter 2018 • Headline operating margin down around 1.0 margin point on constant currency basis (excluding impact of
Slide 19: Progress on Strategy
PROGRESS ON STRATEGY FIRST QUARTER 2019 TRADING UPDATE 19
Slide 20: Radical Evolution: A Strategy for Growth
RADICAL EVOLUTION: A STRATEGY FOR GROWTH VISION AND DATA AND CREATIVITY OFFER TECHNOLOGY SIMPLER STRUCTURE CULTURE FIRST QUARTER 2019 TRADING UPDATE 20
Slide 21: First Quarter Strategy Update
FIRST QUARTER STRATEGY UPDATE • New strategy resonating well with clients • Solid new business performance and client stability • Strengthening team and leadership • Technology: partnership with Adobe, Microsoft and SAP on the Open Data Initiative • Disposals of £179M including property – average ne
Slide 22: Other Financial Information
OTHER FINANCIAL INFORMATION FIRST QUARTER 2019 TRADING UPDATE 22
Slide 23: Revenue Less Pass-Through Costs Growth by Country
REVENUE LESS PASS-THROUGH COSTS GROWTH BY COUNTRY REVENUE LESS PASS-THROUGH COSTS GROWTH¹ TOP COUNTRIES² More than 10% Argentina, Belgium, Denmark, Turkey 5% to 10% Brazil, Mainland China, India, Mexico, Poland Greater China³, Germany, Indonesia, Netherlands, 0% to 5% Sweden Canada, Colombia, Dubai,
Slide 24: Revenue Less Pass-Through Costs Growth by Category
REVENUE LESS PASS-THROUGH COSTS GROWTH BY CATEGORY REVENUE LESS PASS-THROUGH COSTS GROWTH¹ CATEGORIES 5% to 10% Government 0% to 5% Food, Media & Entertainment, Retail Automotive, Computers, Drinks, Electronics, Less than 0% Financial Services, Oil, Personal Care & Drugs, Telecommunications, Travel
Slide 25: Effects of Currency
EFFECTS OF CURRENCY STERLING 2019 2018 (WEAKER)/STRONGER US$ 1.30 1.39 -6% € 1.15 1.13 2% • Currency movements accounted for 1.6% ¥ 143 151 -5% increase in revenue less Chinese Renminbi 8.8 8.9 -1% pass-through costs Brazilian Real 4.90 4.52 8% • Reflects overall weakness of £ sterling, Australian $
Slide 26: First Quarter 2019 Trading Update
FIRST QUARTER 2019 TRADING UPDATE London 26 APRIL 2019 FIRST QUARTER 2019 TRADING UPDATE 26