Wpp Plc · LSE:WPP
Wpp — Q3 2019 Earnings Presentation
22 slides from Wpp's earnings presentation, Oct 25, 2019
Slide 1: Third Quarter 2019 Trading Update
THIRD QUARTER 2019 TRADING UPDATE London 25 OCTOBER 2019 THIRD QUARTER 2019 TRADING UPDATE 1
Slide 2: Safe Harbour Statement
SAFE HARBOUR STATEMENT In order to utilise the ‘safe harbour’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’), WPP plc is providing the following cautionary statement. This presentation contains certain forward-looking statements – that is, statements r
Slide 3: Q3 Highlights
Q3 HIGHLIGHTS • Further improvement in Q3: LFL revenue less pass-through costs 0.5%, including Kantar 0.7% • Broad-based by geography: LFL revenue less pass-through costs USA -3.5% (Q2 -5.9%), UK 3.1% (Q2 2.9%), Mainland China -0.4% (Q2 -10.7%) • Global Integrated Agencies grew LFL +1.7% - client lo
Slide 4: Revenue Less Pass-Through Costs Growth vs Prior Year
REVENUE LESS PASS-THROUGH COSTS GROWTH VS PRIOR YEAR Q1 Q2 Q3 YTD Continuing Operations: Reported -1.0% Reported 0.6% Reported 3.7% Reported 1.1% FX 1.8% FX 1.9% FX 3.2% FX 2.3% Acquisitions 0.5% Acquisitions 0.4% Acquisitions 0.0% Acquisitions 0.3% LFL -3.3% LFL -1.7% LFL 0.5% LFL -1.5% Including K
Slide 5: Impact of FX on Revenue Less Pass-Through Costs
IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS¹ 18/FY Act 19/Q1 Act 19/Q2 Act 19/Q3 Act 19/Q4 Est² 19/FY Est² 19/FY @H1 Est 4% 3% • 2019 YTD currency tailwind 2.3% 2% • 2019 currency tailwind 3.2% 1.2%², reduced from H1 2.8% 1% 1.8% 1.9% Est 2.8% due to recent 1.2% strengthening of £ 0% • 2018 full
Slide 6: Revenue Less Pass-Through Costs by Quarter
REVENUE LESS PASS-THROUGH COSTS BY QUARTER CONTINUING OPERATIONS TOTAL INCLUDING KANTAR Δ CONSTANT Δ CONSTANT Δ REPORTED CURRENCY Δ LFL Δ REPORTED CURRENCY Δ LFL Q1 -1.0% -2.8% -3.3% -0.7% -2.3% -2.8% Q2 0.6% -1.3% -1.7% 0.7% -1.0% -1.4% H1 -0.2% -2.0% -2.5% 0.0% -1.6% -2.0% Q3 3.7% 0.5% 0.5% 3.7% 0
Slide 7: Revenue Less Pass-Through Costs by Region – Third Quarter
REVENUE LESS PASS-THROUGH COSTS BY REGION – THIRD QUARTER Δ CONSTANT Δ LFL INCL. 2019 £M 2018 £M Δ REPORTED CURRENCY Δ LFL KANTAR North America 1,034 1,001 3.2% -2.3% -3.5% -3.2% UK 334 332 0.6% 0.6% 3.1% 2.1% Western Continental Europe 518 501 3.4% 2.4% 1.7% 1.8% Asia Pacific, Latin America, Africa
Slide 8: Revenue Less Pass-Through Costs by Region – Year to Date
REVENUE LESS PASS-THROUGH COSTS BY REGION – YEAR TO DATE Δ CONSTANT Δ LFL INCL. 2019 £M 2018 £M Δ REPORTED CURRENCY Δ LFL KANTAR North America 2,985 2,959 0.9% -4.8% -6.1% -5.7% UK 1,026 1,018 0.9% 0.9% 1.9% 0.8% Western Continental Europe 1,560 1,553 0.4% 0.9% 0.4% 0.5% Asia Pacific, Latin America,
Slide 9: Revenue Less Pass-Through Costs by Sector – Third Quarter
REVENUE LESS PASS-THROUGH COSTS BY SECTOR – THIRD QUARTER Δ CONSTANT 2019 £M 2018 £M Δ REPORTED CURRENCY Δ LFL Global Integrated Agencies 2,036 1,941 4.9% 1.7% 1.7% Public Relations 225 215 4.5% 0.6% -0.9% Specialist Agencies 464 472 -1.7% -4.7% -3.4% Total Continuing Operations 2,725 2,628 3.7% 0.5
Slide 10: Revenue Less Pass-Through Costs by Sector – Year to Date
REVENUE LESS PASS-THROUGH COSTS BY SECTOR – YEAR TO DATE Δ CONSTANT 2019 £M 2018 £M Δ REPORTED CURRENCY Δ LFL Global Integrated Agencies 5,894 5,786 1.9% -0.3% -0.6% Public Relations 667 645 3.4% 0.1% -1.3% Specialist Agencies 1,363 1,406 -3.1% -5.3% -5.3% Total Continuing Operations 7,924 7,837 1.1
Slide 11: Trade Estimates of Assignment Wins/Losses Third Quarter
TRADE ESTIMATES OF ASSIGNMENT WINS/LOSSES THIRD QUARTER WINS MEDIA (M)/ WPP AGENCY CREATIVE (C) LOSING AGENCY ACCOUNT OFFICE BILLINGS $M Mindshare M MediaCom Allergan¹ USA 378 Ogilvy C IPG/Other Mondelez Global 350 MediaCom M OMC/PUB/IPG eBay N. America/China 250 Wavemaker M DEN Pernod Ricard China
Slide 12: Net Debt
NET DEBT 30 SEPTEMBER YTD: 2019 £M 2018 £M Δ £M Average net debt¹ on constant currency basis (4,477) (5,102) 625 Average net debt¹ on reportable basis (4,477) (4,991) 514 Net debt¹ at 30 September on constant currency basis (4,469) (4,962) 493 Net debt¹ at 30 September on reportable basis (4,469) (4
Slide 13: Uses of Free Cash Flow
USES OF FREE CASH FLOW FY TARGET SEPT YTD 2019 SEPT YTD 2018 FY 2018 (Disposals)/acquisitions (excluding earnouts): Acquisitions¹ c. £200M £44M £260M £288M Less disposals² c. £(200M) £(311M) £(704M) £(849M) Net (disposals)/acquisitions NEUTRAL £(267M) £(444M) £(561M) Share buy-backs: - - £201M £207M
Slide 14: Guidance
GUIDANCE Our 2019 financial guidance was previously given including Kantar and remains unchanged, both including and excluding Kantar, as follows: • Like-for-like revenue less pass-through costs -1.5% to -2.0% • Headline operating margin to revenue less pass-through costs down around 1.0 margin poin
Slide 15: Strategic Progress – 10 Months On
STRATEGIC PROGRESS – 10 MONTHS ON • Vision and Offer: important wins, improved retention, increasingly integrated proposition to clients • Simpler Structure: demonstrating results with VMLY&R growing in Q3 in USA and globally • Leadership: continued progress in building the team - new CFO appointed
Slide 16: Other Financial Information
OTHER FINANCIAL INFORMATION
Slide 17: 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 % Q1 Q2 Q3 4.4 5.9 7.8 UK % Q1 Q2 Q3 -0.5 2.9 3.1 North America % Q1 Q2 Q3 W. Cont. Europe % -8.8 -5.9 -3.5 Q1 Q2 Q3 -0.2 -0.2 1.7 Asia Pacific % Q1 Q2 Q3 0.6 -2.2 1.2 Africa & M. East % Q1 Q2 Q3 -6.6 -0.9 5.7 Latin Ame
Slide 18: Top 5 Markets
TOP 5 MARKETS¹ USA UK Germany Greater China³ India Headcount 20,000 11,000 7,000 9,000² 8,000 REVENUE LESS PASS-THROUGH COSTS GROWTH² 2019 YTD -6.3% 1.9% -2.0% -2.4% 13.5% 2019 Q3 -3.8% 3.1% -0.4% -0.8% 15.5% 2019 Q2 -5.9% 2.9% -5.7% -9.2% 17.1% 2019 Q1 -9.1% -0.5% 0.7% 4.2% 7.7% 2018 FY -3.8% -0.2%
Slide 19: BRIC Markets
BRIC MARKETS¹ Mainland China Greater China³ Brazil India Russia Headcount 7,000 9,000 5,000 8,000 1,000 REVENUE LESS PASS-THROUGH COSTS GROWTH² 2019 YTD -2.4% -2.4% 11.3% 13.5% 7.8% 2019 Q3 -0.4% -0.8% 8.9% 15.5% 14.7% 2019 Q2 -10.7% -9.2% 14.7% 17.1% 11.5% 2019 Q1 6.1% 4.2% 10.3% 7.7% -3.3% 2018 FY
Slide 20: Effects of Currency
EFFECTS OF CURRENCY STERLING THIRD QUARTER 2019 2018 (WEAKER)/STRONGER US$ 1.23 1.30 -5% € 1.11 1.12 -1% • Q3 currency Chinese Renminbi 8.7 8.9 -2% movements accounted for 3.2% increase¹ in Brazilian Real 4.90 5.15 -5% revenue less pass- through costs Australian $ 1.80 1.78 1% Canadian $ 1.63 1.70 -
Slide 21: Debt Maturity Profile £M at 30 September 2019
DEBT MATURITY PROFILE £M AT 30 SEPTEMBER 2019 £ TOTAL £ TOTAL CREDIT DRAWN 700 ◼ £ bonds £400m (2.875% Sep ’46) 400 400 ◼ US bond $220m (5.625% Nov ’43) 179 179 600 ◼ US bond $93m (5.125% Sep ’42) 76 76 ◼ Eurobonds €600m (1.625% Mar ’30) 532 532 500 ◼ Eurobonds €750m (2.25% Sep '26) 665 665 ◼ Eurobo
Slide 22: Third Quarter 2019 Trading Update
THIRD QUARTER 2019 TRADING UPDATE London 25 OCTOBER 2019 THIRD QUARTER 2019 TRADING UPDATE 22