Wpp Plc · LSE:WPP
Wpp — Q3 2018 Earnings Presentation
27 slides from Wpp's earnings presentation, Oct 25, 2018
Slide 1: Third Quarter 2018 Trading Update
Third Quarter 2018 Trading Update London 25 OCTOBER 2018 WPP plc 1
Slide 2: Safe Harbour Statement
THIRD QUARTER 2018 TRADING UPDATE 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 statemen
Slide 3: Introduction
THIRD QUARTER 2018 TRADING UPDATE Introduction • Weakening Q3 – issues identified at interim results • Decisive action and radical thinking to address legacy issues • Strategy and vision • Key actions: o 16 disposals raising £704m o Creation of VMLY&R o Integration of US healthcare agencies o Streng
Slide 4: Highlights: Third Quarter and Year to Date
THIRD QUARTER 2018 TRADING UPDATE Highlights: Third Quarter and Year to Date • Slowdown in third quarter with like-for-like revenue less pass-through costs down 1.5%, particularly North America and creative agencies, issues highlighted in interim results. Year to date down 0.3%. • North America unde
Slide 5: Revenue Less Pass-Through Costs Growth versus Prior Year
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs Growth versus Prior Year Q1 Q2 Q3 YTD 1.1% Like-for-like -0.1% Like-for-like 0.7% Like-for-like -1.5% Like-for-like 1.1% -0.3% 0.7% 0.3% -3.9% Acquisitions 1.1% Acquisitions 1.1% Acquisitions 0.6% Acquisitions 1.0% FX -6.1% FX -3.9% F
Slide 6: Impact of Foreign Exchange on Revenue Less Pass-Through Costs
THIRD QUARTER 2018 TRADING UPDATE Impact of Foreign Exchange on Revenue Less Pass-Through Costs 2017 FY ACT 2018 Q1 ACT 2018 Q2 ACT 2018 Q3 ACT 2018 Q4 EST 2018 FY EST 6% 4% 4.6% 2% ▪ Sept YTD headwind -4%. ▪ Full year headwind -3%. 0% -1.4% ▪ Q4 run at £/US$ 1.31 and -2.0% £/€ 1.14. -3.3% -2% -3.9%
Slide 7: Revenue Less Pass-Through Costs by Region
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs by Region REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- THIRD QUARTER % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE North America 35.6 1,106 1,156 -4.3% -4.5% -5.3% UK 13.0 402 406 -1.0% -1.0% -2.0% Western Continental Eu
Slide 8: Revenue Less Pass-Through Costs by Region
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs by Region REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- YEAR TO DATE % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE North America 35.3 3,261 3,563 -8.5% -3.1% -3.7% UK 13.3 1,235 1,221 1.2% 1.2% 0.3% Western Continental Eu
Slide 9: Revenue Less Pass-Through Costs Like-For-Like Growth by Region
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs Like-For-Like Growth by Region C. & E. Europe Q1 Q2 Q3 5.6% 3.1% 4.9% UK Q1 Q2 Q3 1.6% 1.4% -2.0% North America Q1 Q2 Q3 -2.4% -3.3% -5.3% W. Cont. Europe Q1 Q2 Q3 -0.2% 3.9% -0.4% Asia Pacific Q1 Q2 Q3 0.7% 1.8% 1.5% Africa & M. East
Slide 10: Major Markets
THIRD QUARTER 2018 TRADING UPDATE Major Markets USA UK Germany Greater China² France REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2018 YTD -3.6% 0.3% -0.4% 3.5% -1.3% 2018 Q3 -5.3% -2.0% -1.0% 1.8% -4.5% 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%
Slide 11: BRIC Markets
THIRD QUARTER 2018 TRADING UPDATE BRIC Markets Mainland China Greater China² Brazil India Russia REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2018 YTD 5.1% 3.5% 7.0% 4.7% -3.3% 2018 Q3 2.5% 1.8% 9.0% 12.9% -0.8% 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
Slide 12: Revenue Less Pass-Through Costs by Sector
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs by Sector REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- THIRD QUARTER % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE Advertising, Media Investment 41.8 1,297 1,420 -8.7% -6.5% -4.0% Management Data Investment Management 15
Slide 13: Revenue Less Pass-Through Costs by Sector
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs by Sector REVENUE LESS PASS-THROUGH COSTS Δ CONSTANT Δ LIKE- YEAR TO DATE % GROUP 2018 £M 2017¹ £M Δ REPORTED CURRENCY FOR-LIKE Advertising, Media Investment 42.5 3,936 4,268 -7.8% -4.0% -1.8% Management Data Investment Management 15.
Slide 14: Trade Estimates of Major Client Wins
THIRD QUARTER 2018 TRADING UPDATE Trade Estimates of Major Client Wins WPP AGENCY INCUMBENT ACCOUNT OFFICE BILLINGS $M MediaCom PUB/OMC Mars Global 930 Wavemaker/Mindshare DEN Mondelez EMEA, Asia Pacific 500 MediaCom DEN Sky Europe 425 MediaCom DEN/PUB Adidas Global 300 Essence PUB T-Mobile N Americ
Slide 15: Trade Estimates of Major Client Losses
THIRD QUARTER 2018 TRADING UPDATE Trade Estimates of Major Client Losses WPP AGENCY WINNING AGENCY ACCOUNT OFFICE BILLINGS $M GTB OMC/IND Ford Global N/A MediaCom/Mindshare PUB Glaxo SmithKline Global 600 Mindshare IPG American Express Global 400 Mindshare OMC HSBC Global 400 Wavemaker PUB Campbell
Slide 16: Net Debt – 30 September 2018
THIRD QUARTER 2018 TRADING UPDATE Net Debt – 30 September 2018 YEAR TO DATE 30 SEPTEMBER 2018 £M 2017 £M VARIANCE £M YTD average net debt on constant currency basis (4,991) (4,981) (10) YTD average net debt on reportable basis (4,991) (5,035) 44 Net debt at 30 September on constant currency basis (4
Slide 17: Uses of Free Cash Flow
THIRD QUARTER 2018 TRADING UPDATE Uses of Free Cash Flow TARGET SEPT YTD 2018 SEPT YTD 2017 FY 2017 (Disposals)/acquisitions (excluding earnouts)¹: Acquisitions £300-£400m £260m £304m £326m Less disposals - £(704m) £(42m) £(296m) Net (disposals)/acquisitions - £(444m) £262m £30m Share buy-backs: - £
Slide 18: Outlook
THIRD QUARTER 2018 TRADING UPDATE Outlook • Financial guidance for full year 2018, reflecting slowdown in third quarter and more cautious outlook for rest of the year: o Like-for-like revenue less pass-through costs growth likely to be down 0.5%-1.0% o Forecast headline PBIT margin to revenue less p
Slide 19: Conclusion
THIRD QUARTER 2018 TRADING UPDATE Conclusion • Slowdown in third quarter reflects weaker performance in North America and creative agencies, issues highlighted in interim results. • Decisive action and radical thinking are needed to address legacy issues and improve performance. • New vision for WPP
Slide 20: Other Financial Information
HARD COPY ONLY Other Financial Information WPP plc 20
Slide 21: Revenue Less Pass-Through Costs Growth by Country: Third Quarter
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs Growth by Country: Third Quarter REVENUE LESS PASS-THROUGH COSTS GROWTH¹ TOP COUNTRIES More than 10% Argentina, Denmark, India, Poland 5% to 10% Brazil, Italy, Singapore, South Korea Belgium, Greater China², Mainland China, Japan, Net
Slide 22: Revenue Less Pass-Through Costs Growth by Category: Third Quarter
THIRD QUARTER 2018 TRADING UPDATE Revenue Less Pass-Through Costs Growth by Category: Third Quarter REVENUE LESS PASS-THROUGH COSTS GROWTH¹ CATEGORIES 0% to 5% Government, Oil, Retail Automotive, Computers, Drinks, Financial Services, Food, Less than 0% Media & Entertainment, Personal Care & Drugs,
Slide 23: Effects of Currency
THIRD QUARTER 2018 TRADING UPDATE Effects of Currency STERLING THIRD QUARTER 2018 2017 STRONGER/(WEAKER) US$ 1.30 1.31 -1% ▪ Currency movements € 1.12 1.11 1% accounted for 2% decrease revenue less ¥ 145 145 - pass-through costs. Chinese Renminbi 8.9 8.7 2% ▪ Reflects strengthening of £ sterling aga
Slide 24: Debt Maturity Profile £m at 30 September 2018
THIRD QUARTER 2018 TRADING UPDATE Debt Maturity Profile £m at 30 September 2018 £ TOTAL £ TOTAL CREDIT DRAWN 800 £ bonds £400m (2.875% Sep ’46) 400 400 US bond $495m (5.625% Nov ’43) 379 379 700 US bond $272m (5.125% Sep ’42) 208 208 Eurobonds €600m (1.625% Mar ’30) 534 534 600 Eurobonds €750m (2.25
Slide 25: Acquisition Highlights Since 1 July
THIRD QUARTER 2018 TRADING UPDATE Acquisition Highlights Since 1 July 2Sales – Luxembourg (Wunderman) 2Sales is an e-commerce consulting agency. It supports global brands in building their business on Amazon, and will become part of Wunderman’s growing global commerce offering, Wunderman Commerce. 2
Slide 26: Acquisition Highlights Since 1 July
THIRD QUARTER 2018 TRADING UPDATE Acquisition Highlights Since 1 July Gorilla – 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 a
Slide 27: Third Quarter 2018 Trading Update
Third Quarter 2018 Trading Update London 25 OCTOBER 2018 WPP plc 27