Wpp Plc · LSE:WPP
Wpp — FY2024 Earnings Presentation
42 slides from Wpp's earnings presentation, Feb 27, 2025
Slide 1: Preliminary Results
PRELIMINARY RESULTS 27 February 2025
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This document contains statements that are, or may be advertising budgets; shifts in industry rates of compensation; major markets (which varies depending on, among other deemed to be, “forward-looking statements”. Forward- regulatory complia
Slide 3: Agenda
• 2024 highlights • Financial performance • Strategic progress • Q&A
Slide 4: Highlights
HIGHLIGHTS .
Slide 5: 2024 Highlights
2024 HIGHLIGHTS • 2024 like-for-like revenue less pass-through costs -1.0%: TAILWINDS HEADWINDS • Growth at GroupM (+2.7%) • Difficult trading in China • Hogarth growth in mid-single digits • Historical client assignment losses • Western Continental Europe +1.7% • Headwinds in project work (inc AKQA
Slide 6: Financial Performance
FINANCIAL PERFORMANCE
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS 2024 Headline Adj. operating Adjusted Y/E LFL Net sales1 operating margin cash conversion Net Debt -1.0% 15.0% 86% £1.7bn (2023: +0.9%) (2023: 14.8%) (2023: 73%) (2023: £2.5bn) 1 Revenue less pass-through costs 7
Slide 8: Unaudited Headline IFRS Income Statement
UNAUDITED HEADLINE¹ IFRS INCOME STATEMENT YEAR TO 31 DECEMBER 2024 £M 2023 £M Δ REPORTED Δ LFL 2 • Reported revenue less pass-through costs declined 4.2% with a 3.1pt drag Revenue 14,741 14,845 (0.7)% 2.3% from FX and 0.1% adverse impact from Revenue less pass-through costs 11,359 11,860 (4.2)% (1.0
Slide 9: Reconciliation of Headline Operating Profit to Reported Operating Profit
RECONCILIATION OF HEADLINE OPERATING PROFIT TO REPORTED OPERATING PROFIT 2024 2023 Δ YEAR TO 31 DECEMBER £M £M £M • Goodwill impairment primarily relates to the carrying value of Headline operating profit 1,707 1,750 (43) goodwill associated with AKQA • Gains on disposals mainly relate to Goodwill i
Slide 10: Performance by Business
PERFORMANCE BY BUSINESS Q4 2024 2024 • GroupM +2.7% in FY24: continued client investment in media, offset by historical 2.4 2.7 client losses and a challenging environment in China • Other GIA -3.9% in FY24: (0.4) • Hogarth mid-single digit growth (0.8) • Other Integrated Creative Agencies (1.7) (2.
Slide 11: Performance by Region
PERFORMANCE BY REGION LFL REVENUE LESS PASS-THROUGH COSTS GROWTH (%) Q4 2024 2024 1.4 1.7 (0.7) (1.4) (2.7) (2.6) (5.1) (4.8) N. N. America America UK UK W. W.Continental ContinentalEurope Europe RoW AP, LA, AME, CEE2 39% OF WPP1 14% OF WPP 21% OF WPP 26% OF WPP • USA: -0.6% in FY24 from a 2023 clie
Slide 12: Diverse Client Sector Mix
DIVERSE CLIENT SECTOR MIX 1 LFL REVENUE LESS PASS-THROUGH COSTS FY 2024 (Q4) 4% 3% 5% Telecom, media & 28% 6% CPG +5.1% (-0.3%) entertainment +3.7% (+4.6%) Financial services +3.1% (+5.8%) 7% Tech & digital services -1.6% (+2.5%) Other -14.8% (-13.3%) Healthcare & pharma -7.2% (-3.1%) Travel & leisu
Slide 13: Change in Headline Operating Margin YoY
CHANGE IN HEADLINE OPERATING MARGIN YOY • Margin: reported basis 15.0%, +0.2pt; +0.4pt on a constant FX 0.3% basis 0.7% (0.3%) • Structural savings: £85m, 0.0% 15.2% representing 68% of two year (0.3%) 15.0% £125m target (ahead of original plan 14.8% (0.2%) of 40-50%) • Other savings: good progress
Slide 14: Adjusted Net Debt Since December 2023
ADJUSTED NET DEBT SINCE DECEMBER 2023 Adjusted operating cash flow £1,460m Adjusted free cash flow £738m £M (2,503) 1,343 (589) 514 1.74x (425) (14) (1,690) 117 (133) 2023 Adjusted Operating FCF Working Capital Dividends to Net interest & Tax Net M&A and disposals1 Dividends Buybacks/FX/Other 2024 N
Slide 15: 2025 Guidance
2025 GUIDANCE LFL revenue less pass-through costs growth of flat to -2%, with performance improving in H2 Headline operating margin expected to be around flat (excluding the impact of FX) Other FY 2025 financial indications: • Mergers and acquisitions will reduce revenue less pass-through costs by a
Slide 16: Strategic Progress
STRATEGIC > PROGRESS
Slide 17: Innovating to Lead, Today and Tomorrow: One Year On
INNOVATING TO LEAD, TODAY AND TOMORROW: ONE YEAR ON • Established WPP Open with a single technology vision, platform and LEAD THROUGH AI, DATA & team 1 TECHNOLOGY • Built AI capabilities across the business, using market leading models • Increased annual investment to £250m (2024) • Our Integrated o
Slide 18: WPP Is Leading in AI
WPP IS LEADING IN AI Augmenting Delivering a Driving greater Growing the human step change in integration value of data Creativity efficiency 18
Slide 19: WPP Open Increases Our Efficiency and Effectiveness
WPP OPEN INCREASES OUR EFFICIENCY AND EFFECTIVENESS Creative Studio Production Studio Media Studio Augments human creativity Automates asset Transforms media production planning and buying • Automates the briefing process • Massively improves efficiency and • Delivers automated audience- • Rapidly g
Slide 20: WPP Open: Enabling Our Clients' Marketing Transformation
WPP OPEN: ENABLING OUR CLIENTS’ MARKETING TRANSFORMATION Client A Client B Client C Consolidation IS the Enabling Technological AI as a forcing function for Transformation Innovation transformation → WPP Open enables the delivery of → WPP Open enables standardisation → WPP Open enables the safe and
Slide 21: GroupM: New Leadership
GROUPM: NEW LEADERSHIP Brian Lesser, Global CEO of GroupM Appointed Sep, 2024. Previously: – Chairman and CEO of InfoSum (2020-2024) – Founding CEO of Xandr (then part of AT&T) (2017-2020) – CEO of GroupM North America, and founding CEO of GroupM’s Xaxis (2015-2017) – VP of Product Management at 24/
Slide 22: GroupM: Driving Change Through Five Priorities
GROUPM: DRIVING CHANGE THROUGH FIVE PRIORITIES DATA & TECHNOLOGY 100% adoption of AI-powered Media Studio, moving from ID to AI PEOPLE Significant investment in technology, data science, and technical roles INNOVATION Introduction of new proprietary trading models COLLABORATION Integration across di
Slide 23: GroupM: Building a Proprietary Data Asset Through AI
GROUPM: BUILDING A PROPRIETARY DATA ASSET THROUGH AI FROM ID TO AI EVERYWHERE Limited Insight, Data Overshare Shared Knowledge, Zero Data Movement Speed & Connectivity CTV PROGRAMMATIC COMMERCE SEARCH AND SOCIAL INFLUENCER 23
Slide 24: 2025 Priorities: A Year of Execution
2025 PRIORITIES: A YEAR OF EXECUTION Drive creative WPP WPP Open Open GroupM GroupM New Business transformation Further drive investment in WPP Improve the competitiveness of An increasingly integrated offer Open to keep it at the forefront of AI our media offer, globally, with a across creative, pr
Slide 25: Medium-Term Financial Framework
MEDIUM-TERM FINANCIAL FRAMEWORK 3%+ 16%-17% 85%+ 1.5-1.75x Like-for-like Headline Adjusted Operating Cash Average Net Debt / Revenue less pass- Operating Margin Flow Conversion Headline EBITDA1 through costs growth DISCIPLINED CAPITAL ALLOCATION Potential for M&A to accelerate growth by up to 1% p.a
Slide 26: Q&A
Q&A
Slide 27: Contacts and Further Resources
CONTACTS AND FURTHER RESOURCES THOMAS SINGLEHURST INVESTOR WEBSITE Group Investor Relations Director wpp.com/investors thomas.singlehurst@wpp.com Tel: +44 (0) 7876 431922 CAPITAL MARKETS DAY 2024 Materials linked here ANTHONY HAMILTON Investor Relations Director INVESTOR WEBINARS anthony.hamilton@wp
Slide 28: Appendix
APPENDIX
Slide 29: New Business
NEW BUSINESS RECENT NEW CLIENT ASSIGNMENTS1,2 Media Media Media Media Media PR Global North America Europe Australia China Europe Creative Creative Creative Creative CRM PR Global baby and child North America US Australia North America North America care, and adult care brands 1. Includes new client
Slide 30: Revenue Less Pass-Through Costs by Sector
REVENUE LESS PASS-THROUGH COSTS BY SECTOR YEAR TO 31 DECEMBER 2024 £M 2023 £M Δ REPORTED Δ LFL Global Integrated Agencies 9,384 9,751 (3.8)% (0.8)% Public Relations 1,089 1,180 (7.7)% (1.7)% Specialist Agencies 886 929 (4.6)% (2.3)% Total 11,359 11,860 (4.2)% (1.0)% Prior year figures have been re-p
Slide 31: Revenue Less Pass-Through Costs by Region
REVENUE LESS PASS-THROUGH COSTS BY REGION YEAR TO 31 DECEMBER 2024 £M 2023 £M Δ REPORTED Δ LFL North America 4,394 4,556 (3.6)% (0.7)% UK 1,588 1,626 (2.3)% (2.7)% Western Continental Europe 2,375 2,411 (1.5)% 1.7% Asia Pacific, Latin America, Africa & Middle 3,002 3,267 (8.1)% (2.6)% East and Centr
Slide 32: Revenue Less Pass-Through Costs Growth
REVENUE LESS PASS-THROUGH COSTS GROWTH BY REGION LIKE-FOR-LIKE % Central & Eastern Europe % Q1 ‘24 Q2 ’24 Q3 ’24 Q4’24 FY ’24 (0.1) 3.4 4.4 2.5 2.6 UK % Q1 ’24 Q2 ’24 Q3 ’24 Q4 ’24 FY ’24 0.3 (5.3) 0.0 (5.1) (2.7) North America % Q1 ‘24 Q2 ’24 Q3 ’24 Q4 ’24 FY ’24 Western Continental Europe % (5.2)
Slide 33: Like-for-Like Revenue Less Pass-Through Costs Growth: Top Markets
LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH TOP MARKETS USA UK GERMANY Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 20% 20% 20% 15% 15% 15% 10% 10% 10% 5.1% 5% 5% 5% 4.0% 2.6% 1.9% 1.1% 1.4% 0.3% 0.0% - - - (1.
Slide 34: Like-for-Like Revenue Less Pass-Through Costs Growth: Top Markets
LIKE-FOR-LIKE REVENUE LESS PASS-THROUGH COSTS GROWTH TOP MARKETS BRAZIL AUSTRALIA CANADA Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 20% 20% 20% 15% 15% 15% 10% 10% 10% 5% 5% 5% 2.3% 0.5% 1.4% - - - (0.8%) (0.3%) (0.2%
Slide 35: Exchange Rate Analysis
EXCHANGE RATE ANALYSIS STERLING IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS GROWTH FOURTH QUARTER 2024 2023 (WEAKER)/STRONGER US$ 1.30 1.27 2.4% Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4'24 € 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%) (3.6%) (4.0%) (3.
Slide 36: Headline Operating Profit and Margin by Sector
HEADLINE OPERATING PROFIT AND MARGIN BY SECTOR 1,2 OPERATING PROFIT £M OPERATING MARGIN3 YEAR TO 31 DECEMBER 2024 2023 2024 2023 Global Integrated Agencies 1,482 1,480 15.8% 15.2% Public Relations 166 191 15.2% 16.2% Specialist Agencies 59 79 6.7% 8.5% Total 1,707 1,750 15.0% 14.8% 1 Figures excludi
Slide 37: Headline Operating Profit and Margin by Region
HEADLINE OPERATING PROFIT AND MARGIN BY REGION 1 OPERATING PROFIT £M OPERATING MARGIN2 YEAR TO 31 DECEMBER 2024 2023 2024 2023 North America 825 834 18.8% 18.3% UK 237 215 14.9% 13.2% Western Continental Europe 259 258 10.9% 10.7% Asia Pacific, Latin America, Africa & Middle 386 443 12.9% 13.6% East
Slide 38: Change in Headline Operating Margin
CHANGE IN HEADLINE OPERATING MARGIN¹ 2024 2023 Δ YEAR TO 31 DECEMBER £M £M £M % Revenue less pass-through costs 11,359 11,860 (501) (4.2) Staff costs pre incentives (7,398) (7,750) 352 4.5 Establishment (472) (516) 44 8.5 IT (684) (698) 14 2.0 Personal (209) (223) 14 6.3 Other operating expenses (52
Slide 39: Restructuring Costs
RESTRUCTURING COSTS YEAR TO 31 DECEMBER 2024 £M 2023 £M Δ IT and other transformation 116 180 (64) Structural restructuring costs (VML, Burson, GroupM) 135 16 119 Restructuring and transformation costs 251 196 55 Property (including 2023 NYC/Global review) 26 232 (206) Total restructuring costs1 277
Slide 40: Leverage Metrics
LEVERAGE METRICS YEAR TO 31 DECEMBER 2024 £M 2023 £M Δ £M Adjusted net debt1 (1,690) (2,503) 813 Available liquidity 4,464 3,845 619 Non-lease headline net finance costs1 (182) (156) 26 Interest cover1 on headline operating profit 9.4x 11.2x (1.8)x Average adjusted net debt (last 12 months)2 (3,485)
Slide 41: Debt Maturity Profile
DEBT MATURITY PROFILE AT DEC 31 2024 (£M) Bonds post swaps EUR GBP USD 700 600 500 400 300 200 100 0 WEIGHTED AVERAGE COUPON 3.5% WEIGHTED AVERAGE MATURITY 6.3 YEARS AVAILABLE LIQUIDITY £4.5bn Exchange Rates £/€ 1.2097 £/$ 1.2519 1 Swapped to £428m (fixed to Mar 25 / float to Mar 33) 2 Swapped to $3
Slide 42: Thank You
4, THANK YOU