Wpp Plc · LSE:WPP
Wpp — H1 2018 Earnings Presentation
41 slides from Wpp's earnings presentation, Sep 4, 2018
Slide 1: 2018 Interim Results
2018 Interim Results London 4 SEPTEMBER 2018 WPP plc 1
Slide 2: Safe Harbour Statement
2018 INTERIM RESULTS Safe Harbour Statement The following cautionary statement is included for safe harbour purposes in connection with the Private Securities Litigation Reform Act of 1995 introduced in the United States of America. This presentation may contain forward-looking statements within the
Slide 3: First Half Highlights
2018 INTERIM RESULTS First Half Highlights Improving top-line growth – like-for-like revenues less pass-through costs up 0.7% in Q2, the first quarter of growth since Q1 2017. Overall North America like-for-like growth still challenging, as advertising, data investment management and brand consu
Slide 4: Summary IFRS Income Statement
2018 INTERIM RESULTS Summary IFRS Income Statement Δ CONSTANT HALF YEAR TO 30 JUNE 2018 £M 2017¹ £M Δ REPORTED² CURRENCY³ Revenue 7,493 7,650 -2.1% 2.9% Gross profit 1,274 1,368 -6.9% -2.2% Operating profit 842 724 16.2% 22.5% PBIT⁴ 851 784 8.6% 14.5% Profit before tax 846 779 8.6% 14.2% Tax rate 16
Slide 5: Summary Headline Results
2018 INTERIM RESULTS Summary Headline¹ Results Δ CONSTANT HALF YEAR TO 30 JUNE 2018 £M 2017² £M Δ REPORTED CURRENCY Δ LIKE-FOR-LIKE³ Revenue 7,493 7,650 -2.1% 2.9% 1.6% Revenue less pass-through costs 6,149 6,376 -3.6% 1.4% 0.3% PBIT before associates 783 836 -6.3% -1.6% PBIT 821 882 -7.0% -2.3% EBI
Slide 6: Revenue Less Pass-Through Costs Growth versus Prior Year
2018 INTERIM RESULTS Revenue Less Pass-Through Costs Growth versus Prior Year Q1 Q2 H1 1.1% Like-for-like -0.1% Like-for-like 0.7% Like-for-like 1.1% 0.3% 0.7% 0.3% -3.9% -5.0% Acquisitions 1.1% Acquisitions 1.1% Acquisitions 1.1% FX -6.1% FX -3.9% FX -5.0% Reported -5.1% Reported -2.1% Reported -3.
Slide 7: Impact of Foreign Exchange on Revenue Less Pass-Through Costs
2018 INTERIM RESULTS Impact of Foreign Exchange on Revenue Less Pass-Through Costs 2017 FY ACT 2018 Q1 ACT 2018 Q2 ACT 2018 Q3 EST 2018 Q4 EST 2018 FY EST 6% 4% 4.6% 2% H1 headwind -5%. Full year headwind -3%. 0% -0.7% Q3-Q4 run at £/US$ 1.30 -2.3% -3.1% and £/€ 1.11. -2% -3.9% -6.1% -4% -6% -
Slide 8: Revenue Less Pass-Through Costs by Region
2018 INTERIM RESULTS Revenue Less Pass-Through Costs by Region REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- HALF YEAR TO 30 JUNE % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE North America 35.0 2,155 2,407 -10.5% -2.4% -2.9% UK 13.5 833 815 2.2% 2.2% 1.5% Western Continental Europe 21.
Slide 9: Revenue Less Pass-Through Costs Like-For-Like Growth by Region
2018 INTERIM RESULTS Revenue Less Pass-Through Costs Like-For-Like Growth by Region C. & E. Europe Q1 Q2 5.6% 3.1% UK Q1 Q2 1.6% 1.4% North America Q1 Q2 -2.4% -3.3% W. Cont. Europe Q1 Q2 -0.2% 3.9% Asia Pacific Q1 Q2 0.7% 1.8% Africa & M. East Q1 Q2 -3.1% -1.6% Latin America Q1 Q2 9.1% 8.6% Q1 Q2 H
Slide 10: Major Markets
2018 INTERIM RESULTS Major Markets USA UK Germany Greater China² France REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2018 H1 -2.8% 1.5% 0.0% 4.5% 0.3% 2018 Q2 -3.3% 1.4% 5.5% 6.5% -0.1% 2018 Q1 -2.2% 1.6% -5.7% 2.1% 0.7% 2017 FY -3.2% 4.8% -1.3% -3.2% 0.4% 1 Like-for-like growth vs prior year WPP plc 10
Slide 11: BRIC Markets
2018 INTERIM RESULTS BRIC Markets Mainland China Greater China² Brazil India Russia REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2018 H1 6.6% 4.5% 5.9% 0.9% -4.6% 2018 Q2 9.0% 6.5% 5.9% 1.4% -9.3% 2018 Q1 3.6% 2.1% 6.0% 0.3% 0.6% 2017 FY -1.8% -3.2% 1.6% 1.1% -15.4% 1 Like-for-like growth vs prior year W
Slide 12: Revenue Less Pass-Through Costs by Sector
2018 INTERIM RESULTS Revenue Less Pass-Through Costs by Sector REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- HALF YEAR TO 30 JUNE % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE Advertising, Media Investment 42.9 2,639 2,848 -7.3% -2.8% -0.8% Management Data Investment Management 15.4 946
Slide 13: Like-For-Like Change in Headline PBIT Margin
2018 INTERIM RESULTS Like-For-Like Change in Headline¹ PBIT Margin² 0.2% -0.2% 13.7% -0.1% -0.2% -0.1% 13.3% -0.4% 1 Figures before goodwill and intangibles charges, gains/losses on step-ups, gains/losses on disposals of subsidiaries and investments, investment write-downs, share of exceptional gain
Slide 14: Headline PBIT and Margin by Region
2018 INTERIM RESULTS Headline PBIT and Margin by Region HEADLINE PBIT¹ £M HEADLINE PBIT MARGIN² HALF YEAR TO 30 JUNE 2018 2017 2018 2017³ North America 348 401 16.2% 16.7% UK 110 112 13.2% 13.8% Western Continental Europe 136 153 10.3% 12.4% Asia Pacific, Latin America, Africa & Middle 227 216 12.3%
Slide 15: Headline PBIT and Margin by Sector
2018 INTERIM RESULTS Headline PBIT and Margin by Sector HEADLINE PBIT¹ £M HEADLINE PBIT MARGIN² HALF YEAR TO 30 JUNE 2018 2017 2018 2017³ Advertising, Media Investment 381 432 14.4% 15.2% Management Data Investment Management 112 129 11.9% 13.0% Public Relations & Public Affairs 85 80 15.5% 14.0% Br
Slide 16: Trade Estimates of Major Client Wins
2018 INTERIM RESULTS Trade Estimates of Major Client Wins WPP AGENCY INCUMBENT ACCOUNT OFFICE BILLINGS $M MediaCom PUB/OMC Mars Global 930 Wavemaker/Mindshare DEN Mondelez EMEA/AP 500 MediaCom DEN Sky Europe 425 MediaCom DEN/PUB Adidas Global 300 Essence PUB T-Mobile N America 274 MediaCom IND Hotel
Slide 17: Trade Estimates of Major Client Losses
2018 INTERIM RESULTS Trade Estimates of Major Client Losses WPP AGENCY WINNING AGENCY ACCOUNT OFFICE BILLINGS $M Mindshare OMC HSBC Global 400 Wavemaker PUB Campbell Soup Co. USA, ANZ, Indonesia 189 Wavemaker PUB Marriott Global 140 Grey N/A Revlon Global 110 Grey N/A Ally Financial USA 87 MediaCom
Slide 18: Internal Estimates of Net New Business Wins: Second Quarter and Year to Date
2018 INTERIM RESULTS Internal Estimates of Net New Business Wins: Second Quarter and Year to Date 2018 Second Quarter 2018 YTD $M Creative Media Total Total Advertising 386 629 1,015 2,271 Other Businesses 504 - 504 919 2018 890 629 1,519 3,190 WPP plc 18
Slide 19: Cash Flow
2018 INTERIM RESULTS Cash Flow HALF YEAR TO 30 JUNE 2018 £M 2017 £M Operating profit 842 724 Gains on disposal & remeasurement¹ (189) (6) Non-cash compensation 42 51 Depreciation & amortisation charges 127 134 Amortisation of acquired intangibles and impairment 84 98 Net interest paid & similar char
Slide 20: Uses of Cash Flow
2018 INTERIM RESULTS Uses of Cash Flow HALF YEAR TO 30 JUNE 2018 £M 2017 £M Net cash generation 605 686 Capital expenditure (178) (120) Net disposals/(acquisitions) 295 (241) - Disposal proceeds 469 6 - Net initial payments¹ (136) (185) - Earnout payments/loan note redemptions (38) (62) Other (27) (
Slide 21: Disposal proceeds
2018 INTERIM RESULTS Disposal proceeds 2018 £M Globant 254 Imagina (return of capital from associate) 108 Full Screen 45 Other 62 Half Year to 30 June 469 AppNexus 169 oOh!media 38 Year to Date 676 WPP plc 21
Slide 22: Net Debt – 30 June 2018
2018 INTERIM RESULTS Net Debt – 30 June 2018 HALF YEAR TO 30 JUNE 2018 £M 2017 £M VARIANCE £M YTD average net debt on constant currency basis (4,979) (4,706) (273) YTD average net debt on reportable basis (4,979) (4,811) (168) Net debt at 30 June on constant currency basis (4,632) (4,716) 84 Net deb
Slide 23: Uses of Free Cash Flow
2018 INTERIM RESULTS Uses of Free Cash Flow TARGET H1 2018 H1 2017 FY 2017 Acquisitions (excluding earnouts)¹: Gross £300-£400m £136m £185m £326m Less proceeds - £(469m) £(6m) £(296m) Net (disposals)/acquisitions - £(333m) £179m £30m Share buy-backs: - £201m £290m £504m % of issued share capital 2%-
Slide 24: Outlook
2018 INTERIM RESULTS Outlook Financial guidance for full year 2018 reflects first half revenue less pass-through costs growth and second quarter revised forecast: – Like-for-like revenue and revenue less pass-through costs growth similar to first half. – Target full year headline PBIT margin simil
Slide 25: The Future
2018 INTERIM RESULTS THE FUTURE WPP plc 25
Slide 26: How We See the World
2018 INTERIM RESULTS How We See the World Continued growth in demand from clients for marketing and communication services, as clients need to: – Drive their top-line growth. – Build and manage direct customer relationships. – Transform their customer experiences. – Sell in a multi-channel environ
Slide 27: Path to Growth for WPP
2018 INTERIM RESULTS Path to Growth for WPP New vision for WPP: where we will grow and invest. Focus on our clients – provide faster, more agile, more effectively integrated solutions. Continue to simplify our organisation to better position it for growth: – easier for clients to access our ta
Slide 28: Winning New Business Through Improved Client Focus
2018 INTERIM RESULTS Winning New Business Through Improved Client Focus WPP plc 28
Slide 29: Reshaping and Simplifying our Portfolio
2018 INTERIM RESULTS Reshaping and Simplifying our Portfolio DISPOSALS/REALIGNMENTS ACQUISITIONS AppNexus Gorilla - (Wunderman) Dentsu JVs: - Japan, Malaysia, Singapore, Taiwan, HZ - (Burson Cohn & Wolfe) Thailand and Vietnam FullSix Globant Grey Belgrade Imagina (return of capital f
Slide 30: Conclusion
2018 INTERIM RESULTS Conclusion Business momentum continues to improve slowly: first quarter of like-for-like revenue less pass- through costs growth in a year. Listening to clients and people on how best to evolve our offer and strategy. Win rate has improved and we are growing relationships
Slide 31: Other Financial Information
HARD COPY ONLY Other Financial Information WPP plc 31
Slide 32: Unaudited IFRS Income Statement
2018 INTERIM RESULTS Unaudited IFRS Income Statement HALF YEAR TO 30 JUNE 2018 £M 2017¹ £M Δ REPORTED Δ CONSTANT CURRENCY Revenue 7,493 7,650 -2.1% 2.9% Gross profit 1,274 1,368 -6.9% -2.2% Operating profit pre exceptional & goodwill/intangibles² 783 836 -6.3% -1.6% Net exceptional gain/(loss) 143 (
Slide 33: Net Exceptional Gain
2018 INTERIM RESULTS Net Exceptional Gain HALF YEAR TO 30 JUNE 2018 £M Gain on disposals of investments and subsidiaries (Globant £185m) 190 Restructuring costs (46) Investment write-downs (1) Net exceptional gain 143 Share of associate exceptionals (29) Net exceptional gain including associate exce
Slide 34: Unaudited Headline IFRS Income Statement
2018 INTERIM RESULTS Unaudited Headline¹ IFRS Income Statement Δ CONSTANT HALF YEAR TO 30 JUNE 2018 £M 2017² £M Δ REPORTED CURRENCY Δ LIKE-FOR-LIKE Revenue 7,493 7,650 -2.1% 2.9% 1.6% Revenue less pass-through costs 6,149 6,376 -3.6% 1.4% 0.3% PBIT before associates 783 836 -6.3% -1.6% Income from a
Slide 35: Revenue Less Pass-Through Costs Growth by Country
2018 INTERIM RESULTS Revenue Less Pass-Through Costs Growth by Country REVENUE LESS PASS-THROUGH COSTS GROWTH¹ TOP COUNTRIES More than 10% Argentina, South Korea Brazil, Mainland China, Colombia, Japan, Mexico, Poland, 5% to 10% Sweden Greater China², Denmark, France, Germany, Netherlands, 0% to 5%
Slide 36: Revenue Less Pass-Through Costs Growth by Category
2018 INTERIM RESULTS Revenue Less Pass-Through Costs Growth by Category REVENUE LESS PASS-THROUGH COSTS GROWTH¹ CATEGORIES More than 10% Retail 5% to 10% Electronics 0% to 5% Automotive, Media & Entertainment, Travel & Airline Computers, Drinks, Financial Services, Food, Government, Oil, Less than 0
Slide 37: Effects of Currency
2018 INTERIM RESULTS Effects of Currency STERLING HALF YEAR TO 30 JUNE 2018 2017 STRONGER/(WEAKER) US$ 1.38 1.26 10% Currency movements € 1.14 1.16 -2% accounted for 5.0% decrease revenue less ¥ 150 141 6% pass-through costs. Chinese Renminbi 8.8 8.7 1% Reflects strengthening of £ sterling again
Slide 38: Debt Maturity Profile at 30 June 2018
2018 INTERIM RESULTS Debt Maturity Profile £m at 30 June 2018 £ TOTAL £ TOTAL CREDIT DRAWN 700 £ bonds £400m (2.875% Sep ’46) 400 400 US bond $500m (5.625% Nov ’43) 379 379 600 US bond $272m (5.125% Sep ’42) 206 206 Eurobonds €600m (1.625% Mar ’30) 531 531 500 Eurobonds €750m (2.25% Sep '26) 664 664
Slide 39: Acquisition Highlights Since 1 April
2018 INTERIM RESULTS Acquisition Highlights Since 1 April Gorilla¹ – USA (Wunderman) Gorilla Group is an award-winning e-commerce specialist based in USA. Clients include American Hotel Register Company, Gates Industrial Corporation and protein bar manufacturer RXBAR. The agency employs about 370 em
Slide 40: Acquisition Highlights Since 1 April
2018 INTERIM RESULTS Acquisition Highlights Since 1 April Y&R/Wunderman/Sudler & Hennessey¹ - SE Asia WPP has acquired full ownership of Y&R and Wunderman joint venture agency assets across Southeast Asia and Taiwan, and Dentsu Sudler & Hennessey in Japan, following a share swap transaction with Den
Slide 41: 2018 Interim Results
2018 Interim Results London 4 SEPTEMBER 2018 WPP plc 41