Wpp Plc · LSE:WPP
Wpp — Q1 2021 Earnings Presentation
28 slides from Wpp's earnings presentation, Apr 28, 2021
Slide 1: Q1 Trading Update
Q1 TRADING UPDATE 28 April 2021
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation contains statements that are, or may be deemed to be, “forward-looking statements”. Forward-looking statements give the Group’s current expectations or forecasts of future events. An investor can identify these statements by
Slide 3: Agenda
AGENDA 1. Q1 HIGHLIGHTS 2. FINANCIAL PERFORMANCE 3. BUSINESS UPDATE 4. Q&A
Slide 4: Strong Start to the Year
STRONG START TO THE YEAR • LFL1 revenue less pass-through costs +3.1%. Broad-based recovery: - Top 5 markets: US +0.7%, UK +3.9%, Germany +2.5%, Greater China +18.4%, India -0.5% - Global Integrated Agencies +2.8% (GroupM +5.8%), PR +2.0%, Specialist Agencies +7.5% • Net new business $1.3 billion in
Slide 5: Financial Performance
FINANCIAL PERFORMANCE
Slide 6: Revenue Less Pass-Through Costs by Quarter
REVENUE LESS PASS-THROUGH COSTS BY QUARTER1 £M Δ REPORTED Δ LFL 2020 Q1 2,366 (4.3%) (3.3%) 2020 Q2 2,302 (15.6%) (15.1%) 2020 Q3 2,401 (11.9%) (7.6%) 2020 Q4 2,693 (7.8%) (6.5%) 2021 Q1 2,344 (1.4%) 3.1% 1. Continuing operations. Q1 2021 TRADING UPDATE 6
Slide 7: Global Integrated Agencies: Recovery Led by VMLY&R and GroupM
GLOBAL INTEGRATED AGENCIES: RECOVERY LED BY VMLY&R AND GROUPM LFL REVENUE LESS PASS-THROUGH COSTS GROWTH PERFORMANCE REVIEW Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 5.0% • GIA now includes AKQA Group, as well as 2.8% Geometry and GTB as part of VMLY&R 0.0% • VMLY&R the best performer, continuing (2.6
Slide 8: Public Relations: Solid Growth
PUBLIC RELATIONS: SOLID GROWTH LFL REVENUE LESS PASS-THROUGH COSTS GROWTH PERFORMANCE REVIEW Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 5.0% • Continuing good demand for 2.0% strategic communications advice 0.0% (1.4%) • Growth led by H+K and Specialist PR (2.9%) (5.0%) (4.1%) (driven by Finsbury Glove
Slide 9: Specialist Agencies: Strong Rebound
SPECIALIST AGENCIES: STRONG REBOUND LFL REVENUE LESS PASS-THROUGH COSTS GROWTH PERFORMANCE REVIEW Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 10.0% • All main agencies saw improving 7.5% sequential performance 5.0% • Landor, Superunion and DesignBridge 0.0% benefited from renewed demand for brand consul
Slide 10: Top Markets Performance
TOP 5 MARKETS PERFORMANCE1 USA UK GERMANY Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 3.9% 2.5% 0.7% (1.9%) (1.8%) (0.8%) (5.5%) (6.2%) (4.2%) (6.5%) (4.3%) (9.6%) (7.4%) (11.6%) (23.3%) GREATER CHINA2 INDIA Q1 2020 Q2 2020
Slide 11: Other Major Markets Performance
OTHER MAJOR MARKETS PERFORMANCE1 FRANCE ITALY Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 12.4% (1.0%) (4.0%) (5.0%) (7.4%) (13.1%) (12.7%) (16.2%) (27.9%) (29.9%) SPAIN BRAZIL Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 8.5% 3.
Slide 12: Impact of FX on Revenue Less Pass-Through Costs
IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS¹ 20/FY Act 21/Q1 Act 21/Q2 Est 21/Q3 Est 21/Q4 Est 21/FY Est 0% • YTD currency (1.2%) headwind (4.3%) -1% (3.4%) • 2020 full year -2% (4.3%) (4.4%) (4.4%) headwind (1.2%) -3% (6.3%) • 2021 full year currency headwind (4.4%) at -4% latest exchange rates
Slide 13: Main Movements in Net Debt
MAIN MOVEMENTS IN NET DEBT (£M) -696 -1,417 -1,540 -2,827 Notes: - Itemised movements in net debt represent management figures, which may vary from the presentation of the cash flow under IFRS. Q1 2021 TRADING UPDATE 13 - Acquisitions/disposals include earn-out payments.
Slide 14: 2021 Outlook
2021 OUTLOOK Our financial targets remain in line with guidance: • LFL revenue less pass-through costs growth of mid-single digits % • Headline operating margin of 13.5-14.0% • Capex £450-500m and net working capital outflow £200-300m • Latest projected FX effects: − c. 4-5 percentage points headwin
Slide 15: Business Update
BUSINESS UPDATE
Slide 16: Recovery Underpinned by Client Mix
RECOVERY UNDERPINNED BY CLIENT MIX Q1 REVENUE LESS PASS- THROUGH COSTS Govt, Public Sector & GROWTH BY CLIENT Travel & Leisure Non-Profit SECTOR (1.0)% Other (34.5)% (8.0)% 3% 3% Financial Services 5% CPG (5.5)% 24% • Growth driven by the leading sectors of 6% +8.7% Telecom, Media & 2020 – CPG, Tech
Slide 17: Continued Strategic Progress
CONTINUED STRATEGIC PROGRESS GROWTH INVESTMENTS SIMPLIFICATION SUSTAINABILITY • DTI – Brazil • Choreograph • WPP net zero by • NN4M – UK • BAV 2025 • Kantar/Numerator • WPP AUNZ • Including supply chain, net zero by 2030 Q1 2021 TRADING UPDATE WPP 17
Slide 18: What Is Choreograph?
WHAT IS CHOREOGRAPH? LAUNCH PRODUCTS/SERVICES • WPP’s global data products and • Audience insights and planning technology company • Private identity solutions • Privacy-first approach to customer • AI-based media spend optimisation data • Growth forecasts through • Combines specialist data units of
Slide 19: Summary
SUMMARY • Strong start to the year • Continued progress on strategic execution • 2021 priorities: − Managing continued COVID impact on people and clients − New business, new growth opportunities − Ongoing execution on December 2020 plan Q1 2021 TRADING UPDATE 19
Slide 20: Q&A
Q&A
Slide 21: Other Financial Information
OTHER FINANCIAL INFORMATION
Slide 22: Revenue Less Pass-Through Costs by Region
REVENUE LESS PASS-THROUGH COSTS BY REGION1 FIRST QUARTER 2021 £M 2020 £M Δ REPORTED Δ LFL North America 886 938 (5.6%) 1.6% UK 321 313 2.4% 3.9% Western Continental Europe 492 467 5.3% 3.7% Asia Pacific, Latin America, Africa & Middle East and Central & Eastern 635 648 (1.9%) 4.7% Europe Total Conti
Slide 23: Revenue Less Pass-Through Costs by Sector
REVENUE LESS PASS-THROUGH COSTS BY SECTOR1 FIRST QUARTER 2021 £M 2020 £M2 Δ REPORTED Δ LFL Global Integrated Agencies 1,934 1,970 (1.8%) 2.8% Public Relations 206 212 (3.0%) 2.0% Specialist Agencies 194 184 5.3% 7.5% Total Continuing Operations 2,334 2,366 (1.4%) 3.1% 1. Continuing operations. 2. Du
Slide 24: Revenue Less Pass-Through Costs Growth vs Prior Year
REVENUE LESS PASS-THROUGH COSTS GROWTH VS PRIOR YEAR1 Q1 Reported (1.4%) FX (4.3%) Acquisitions (0.2%) LFL 3.1% 1. Continuing operations. Q1 2021 TRADING UPDATE 24
Slide 25: Revenue Less Pass-Through Costs Growth by Region Like-for-Like
REVENUE LESS PASS-THROUGH COSTS GROWTH¹ BY REGION LIKE-FOR-LIKE % C. & E. Europe % FY 20 Q1 21 (2.6) 9.5 UK % FY 20 Q1 21 (10.5) 3.9 North America % FY 20 Q1 21 W. Cont. Europe % (5.8) 1.6 FY 20 Q1 21 (8.1) 3.7 Asia Pacific % FY 20 Q1 21 (11.6) 4.7 Africa & M. East % FY 20 Q1 21 (10.8) (5.9) Latin A
Slide 26: BRIC Markets Performance
BRIC MARKETS PERFORMANCE1 CHINA GREATER CHINA² BRAZIL Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 25.1% 18.4% 8.5% 3.5% (3.1%) (1.3%) (9.1%) (10.5%) (12.1%) (14.1%) (16.1%) (16.7%) (18.7%) (23.4%) (21.3%) INDIA RUSSIA Q1 202
Slide 27: Debt Maturity Profile at March 31, 2021
DEBT MATURITY PROFILE £M AT MARCH 31, 2021 £ TOTAL £ TOTAL CREDIT DRAWN 700 ◼ £ bonds £400m (2.875% Sep ’46) 400 400 ◼ US bond $220m (5.625% Nov ’43) 159 159 600 ◼ US bond $93m (5.125% Sep ’42) 67 67 500 ◼ £ bonds £250m (3.75% May ’32) 250 250 ◼ Eurobonds €600m (1.625% Mar ’30) 511 511 400 ◼ Eurobon
Slide 28: Effects of Currency
EFFECTS OF CURRENCY STERLING FIRST QUARTER 2021 2020 (WEAKER)/STRONGER US$ 1.38 1.28 8% € 1.15 1.16 (1%) • Currency movements accounted for 4.3% Chinese Renminbi 8.9 8.9 - decrease¹ in revenue Brazilian Real 7.56 5.7 33% less pass-through costs Australian $ 1.78 1.95 (8%) • £ sterling strengthens ag