Wpp Plc · LSE:WPP
Wpp — Q3 2022 Earnings Presentation
26 slides from Wpp's earnings presentation, Oct 26, 2022
Slide 1: Q3 Trading Update
Q3 TRADING UPDATE 26 October 2022
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
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 t
Slide 3: Q3 highlights, Financial performance, Q&A
– Q3 highlights – Financial performance – Q&A
Slide 4: Highlights: Continued Demand from Clients
HIGHLIGHTS: CONTINUED DEMAND FROM CLIENTS • Continued momentum: Q3 LFL revenue less pass-through costs growth1 +3.8% (Q3 PY +15.7%); acceleration on a 3-year stack to +10.9% (Q2 +9.7%) • Strong client, sectoral and geographic performance in Q3 – 9 out of top 20 clients grew by double digits – GIA +4
Slide 5: Financial Performance
FINANCIAL PERFORMANCE
Slide 6: Revenue Less Pass-Through Costs by Quarter
REVENUE LESS PASS-THROUGH COSTS BY QUARTER £M Δ REPORTED Δ LFL Δ VS 19 LFL – 3.8% growth in Q3: impacted Q1 2,574 10.3% 9.5% 9.2% by China lockdowns, a Covid- related contract benefit in Q3 ’21 Q2 2,935 14.4% 8.3% 9.7% – Q3 underlying growth 4.8% ex Covid-related contract H1 5,509 12.5% 8.9% 9.4% –
Slide 7: Continued Growth Across Business Lines
CONTINUED GROWTH ACROSS BUSINESS LINES LFL REVENUE LESS PASS-THROUGH COSTS GROWTH Q2 1-year basis Q3 1-year basis 1,200 - Global integrated agencies (GIA) 10.9 clients representing 10.9 8.2 76% of WPP total - GroupM: continued strong 7.3 revenue less pass- 4.3 4.7 6.0 4.0 5.8 through costs performan
Slide 8: Continued Investment for Growth
CONTINUED INVESTMENT FOR GROWTH ORGANIC AQUISITIONS TRANSFORMATION ecommerce, >600 people - On target to achieve annual savings of £300m this year, against a 2019 baseline Data Investing in People PR, 330 people ecommerce consultancy, 155 people Media planning and performance Passport Brand Design 3
Slide 9: Major Markets
MAJOR MARKETS LFL REVENUE LESS PASS-THROUGH COSTS GROWTH (%) - USA, UK: growth driven by Q2 1-year basis Q3 1-year basis investments 47.6 - Germany: 3.3% excluding 23.9 19.7 impact of Covid-related 16.5 10.4 4.5 6.2 4.2 11.5 10.7 8.0 7.7 contract in Q3 20211 3.2 4.0 2.3 (6.1)(9.0) (1.3) (6.8) - Chin
Slide 10: Cash Generation, Supporting Investment in Growth and Shareholder Returns
CASH GENERATION, SUPPORTING INVESTMENT IN GROWTH AND SHAREHOLDER RETURNS MOVEMENT IN ADJUSTED NET DEBT SINCE SEPTEMBER 2021 £M - Increase in year-on-year adjusted net debt driven by returns to shareholders; £1.0 billion of share buybacks completed in last 12 months (1,629) - Year-end adjusted net de
Slide 11: 2022 Guidance
2022 GUIDANCE Growth Margin Borrowing LFL revenue less pass-through Headline operating profit margin Average adjusted net debt/EBITDA costs growth up 30 to 50 bps slightly below the 6.5 - 7.0% 1.5x-1.75x guidance range1 (Previously 6.0 - 7.0%) (Previously up around 50 bps) (Unchanged) − M&A contribu
Slide 12: Continued Success with Clients
CONTINUED SUCCESS WITH CLIENTS NEW BUSINESS LEADING IN MEDIA LEADING RANKINGS (Creative & Commerce) (Media) (Media) (CRM) (Media) (Creative) (Media) (Media) (Creative) (Branding) $1.7bn of new business, GroupM led both Topped R3 combined creative and with higher win-rate new business and media leagu
Slide 13: Summary and Outlook
SUMMARY AND OUTLOOK • Client demand remains strong, accelerating our growth on a 3-year stack to +10.9% in Q3 • Strength of our offer, agencies, talent and technology driving performance – Creative: good growth across AKQA, Ogilvy, Wunderman Thompson and Hogarth – Media: GroupM leading new business
Slide 14: Q&A
Q&A
Slide 15: Contacts and Further Resources
CONTACTS AND FURTHER RESOURCES ANTHONY HAMILTON WPP webinars | WPP WPP IQ Investor Relations Director WPP’s industry intelligence platform anthony.hamilton@wpp.com PR and Public Affairs (July 2022) wpp.com/wpp-iq Tel: +44 (0) 7464 532 903 The role of the Global Client Lead “THIS WEEK, NEXT WEEK” CAI
Slide 16: Appendix
APPENDIX
Slide 17: Examples of Our Purpose in Action
EXAMPLES OF OUR PURPOSE IN ACTION “Making Space” – a new initiative focused on giving See how WPP is Making Space for people space to look after their wellbeing and inspire its people to recharge, reset and PEOPLE creativity, including a global, company-wide break from celebrate Friday 8th July to M
Slide 18: Other Financial Information
OTHER FINANCIAL INFORMATION
Slide 19: Client Sector Analysis
CLIENT SECTOR ANALYSIS SEP 2022 YTD REVENUE LESS PASS-THROUGH COSTS GROWTH BY CLIENT SECTOR1 Govt, Public Travel & Sector & Leisure Non-Profit Other 17.4% (20.5)% +8.4% Financial 3% 2% CPG Services +7.4% 6% +2.3% 24% Telecom, 6% Media & Entertainment 7% +8.4% Automotive 10% (6.7)% 20% Tech & Digital
Slide 20: Revenue Less Pass-Through Costs by Sector
REVENUE LESS PASS-THROUGH COSTS BY SECTOR1 THIRD QUARTER 2022 £M 2021 £M1 Δ REPORTED Δ LFL Δ Q3 YTD LFL Global Integrated Agencies 2,458 2,190 12.3% 4.3% 7.0% Public Relations 296 231 28.0% 5.8% 8.9% Specialist Agencies2 232 219 6.1% (3.9)% 6.0% Total 2,986 2,640 13.1% 3.8% 7.1% 1 Prior year figures
Slide 21: Revenue Less Pass-Through Costs by Region
REVENUE LESS PASS-THROUGH COSTS BY REGION THIRD QUARTER 2022 £M 2021 £M Δ REPORTED Δ LFL Δ Q3 YTD LFL North America 1,222 975 25.5% 4.7% 7.8% UK 381 362 5.1% 4.2% 6.1% Western Continental Europe1 547 562 (2.7)% (2.1)% 4.2% Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europ
Slide 22: Top Markets Like-for-Like Revenue Less Pass-Through Costs Growth
TOP 1 MARKETS LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH USA UK GERMANY Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 50.0% 50.0% 50.0% 45.0% 45.0% 40.0% 40.0% 40.0% 34.5% 35.0% 35.0% 30.0% 31
Slide 23: Top Markets Performance Like-for-Like Growth
TOP MARKETS PERFORMANCE LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH AUSTRALIA CANADA FRANCE Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 50.0% 50.0% 50.0% 45.0% 45.0% 40.0% 40.0% 40.0% 35.0% 3
Slide 24: Sterling Weakness: Tailwind to Revenue Less Pass-Through Costs
STERLING WEAKNESS: TAILWIND TO REVENUE LESS PASS-THROUGH COSTS 2021 Act Q1 22 Act Q2 22 Act Q3 22 Act Q4 22 Est 2022 Est 11.9% 9.1% % of net sales by currency 7.0% Q3 YTD 2022 5.9% 32% 38% 0.3% 14% 16% US$ Euro Sterling Other (5.0%) 2021 Act Q1 2022 Q2 22 Act Q3 22 Act Q4 22 Est 2022 Est US$ 1.39 1.
Slide 25: Debt Maturity Profile
DEBT MATURITY PROFILE £M AT SEPTEMBER 30, 2022 800 £ TOTAL £ TOTAL CREDIT DRAWN ◼ £ bonds £400m (2.875% Sep ’46) 400 400 700 ◼ US bond $220m (5.625% Nov ’43) 197 197 600 ◼ US bond $93m (5.125% Sep ’42) 83 83 ◼ £ bonds £250m (3.75% May ’32) 250 250 500 ◼ Eurobonds €600m (1.625% Mar ’30) 527 527 400 ◼
Slide 26: Thank You
THANK YOU . . < esesesesecese eteseses- SeSesese egesetesese: essssse” | ssseses