Wpp Plc · LSE:WPP
Wpp — Q1 2020 Earnings Presentation
33 slides from Wpp's earnings presentation, Apr 29, 2020
Slide 1: Trading Update First Quarter 2020
TRADING UPDATE FIRST QUARTER 2020 29.4.2020
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: Agenda
AGENDA Q1 HIGHLIGHTS FINANCIAL PERFORMANCE BUSINESS UPDATE Q&A
Slide 4: COVID-19 Response: Four Areas of Focus
COVID-19 RESPONSE: FOUR AREAS OF FOCUS 1 Maintain health and safety of our people 2 Provide uninterrupted service to our clients 3 Help our communities through our creativity, media and technology 4 Ensure WPP’s financial resilience to protect all our stakeholders FIRST QUARTER 2020 TRADING UPDATE 4
Slide 5: Q1 Highlights
Q1 HIGHLIGHTS • Good start (Jan-Feb ex Greater China up 0.4%1) with March impacted by COVID-19 (-7.9%1) • Significant impact in Q2, business well diversified • Clients: Packaged goods, technology, pharma more resilient to date • Geography: China emerging through other side • Services: PR, ecommerce,
Slide 6: Financial Performance
FINANCIAL PERFORMANCE
Slide 7: Revenue Less Pass-Through Costs by Sector
REVENUE LESS PASS-THROUGH COSTS BY SECTOR Δ CONSTANT Δ LFL FIRST QUARTER 2020 £M 2019 £M Δ REPORTED CURRENCY1 Δ LFL2 MARCH Global Integrated Agencies 1,745 1,807 -3.5% -3.2% -2.6% -6.6% Public Relations 212 214 -1.0% -1.3% -1.4% -4.4% Specialist Agencies 409 450 -9.0% -8.6% -7.4% -15.2% Total Contin
Slide 8: Revenue Less Pass-Through Costs by Region
REVENUE LESS PASS-THROUGH COSTS BY REGION Δ CONSTANT Δ LFL FIRST QUARTER 2020 £M 2019 £M Δ REPORTED CURRENCY1 Δ LFL2 MARCH North America 938 945 -0.8% -2.7% -1.9% -3.6% United Kingdom 313 332 -5.5% -5.5% -4.2% -9.8% Western Continental Europe 467 490 -4.7% -3.6% -3.7% -9.6% Asia Pacific, Latin Ameri
Slide 9: Top 5 Markets
TOP 5 MARKETS¹ USA UK Germany Greater China³ India Headcount 20,000 11,000 7,000 9,000 8,000 REVENUE LESS PASS-THROUGH COSTS GROWTH² 2020 March -3.7% -9.8% -14.9% -29.9% -1.1% 2020 Q1 -1.9% -4.2% -4.3% -21.3% 6.1% 2019 FY -6.0% 0.3% -0.3% -3.8% 9.7% 1. Top 5 markets for continuing operations 2. Like
Slide 10: Other Major Markets
OTHER MAJOR MARKETS France Italy Spain Brazil Headcount 2,000 2,000 2,000 5,000 REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2020 March -7.1% -23.7% 0.0% -16.7% 2020 Q1 -4.0% -16.2% 3.8% -1.3% 2019 FY -1.3% -2.1% 1.0% 9.3% 1. Like-for-like growth vs prior year from continuing operations FIRST QUARTER 202
Slide 11: Trade Estimates of YTD Assignment Wins/Losses
TRADE ESTIMATES OF YTD ASSIGNMENT WINS/LOSSES WINS MEDIA (M)/ WPP AGENCY CREATIVE (C) ACCOUNT OFFICE BILLINGS $M WPP C Intel Global 800 Wavemaker M Novo Nordisk Global 350 Grey C Discover NA 258 Mediacom M Hasbro Global 225 Mindshare M Playmobile Europe 30 Mediacom M P&G Turkey 30 VMLY&R M/C BASF Gl
Slide 12: Significant Improvement in Net Debt Year-on-Year
SIGNIFICANT IMPROVEMENT IN NET DEBT YEAR-ON-YEAR (£M) -1.2% -1,540 -4,017 -4,624 -2,827 Notes: - Itemised movements in net debt represent management figures, which may vary from the presentation of the cash flow under IFRS 12 - Acquisitions/disposals include earn-out payments
Slide 13: Uses of Free Cash Flow
USES OF FREE CASH FLOW MARCH YTD MARCH YTD 2020 2019 FY 2019 (Disposals)/acquisitions (excluding earnouts): Acquisitions¹ £22M £18M £94M Less disposals² (£161M) £(179M) £(2,315M) Net (disposals)/acquisitions (£139M) £(161M) £(2,221M) Share buybacks: £285M - £44M % of issued share capital 2.6% - 0.4%
Slide 14: Significant Liquidity Available
SIGNIFICANT LIQUIDITY AVAILABLE £ TOTAL £ TOTAL CREDIT DRAWN ◼ £ bonds £400m (2.875% Sep ’46) 400 400 700 ◼ US bond $220m (5.625% Nov ’43) 177 177 600 ◼ US bond $93m (5.125% Sep ’42) 75 75 ◼ Eurobonds €600m (1.625% Mar ’30) 531 531 500 ◼ Eurobonds €750m (2.25% Sep '26) 664 664 400 ◼ Eurobond €500m (
Slide 15: Extensive Programme of Actions to Protect Business and People
EXTENSIVE PROGRAMME OF ACTIONS TO PROTECT BUSINESS AND PEOPLE FROM COVID-19 IMPACT COST CAPEX AND WORKING CAPITAL • Hiring freeze, freelancer review, delays • £100m reduction in capex budget to pay rises and stopping discretionary • Continuous review of working capital spend movements • Exec and Boa
Slide 16: Business Update
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Slide 17: Our Priorities: People, Clients, Communities
OUR PRIORITIES PEOPLE CLIENTS COMMUNITIES FIRST QUARTER 2020 TRADING UPDATE 17
Slide 18: People: Effective Response to Lockdown
PEOPLE: EFFECTIVE RESPONSE TO ”LOCKDOWN” WORKING REMOTELY REGULAR SUPPORT PROTECT JOBS WHEREVER POSSIBLE • WPP Town Halls • Over 3,000 people by Market on salary sacrifice • CEO and team • Internal jobs communications market • WPP TV • Upping training and development • Mental wellbeing a particular
Slide 19: Clients: Rapid Action to Re-plan and Communicate
CLIENTS: RAPID ACTION TO RE-PLAN AND COMMUNICATE 84% of consumers will judge companies by how they RELEVANT COMMUNICATIONS RE-PLANNING COMMUNICATIONS respond • Responding quickly, working faster • Re-planning media to higher ROI channels • Production ongoing with CGI, 84% of consumers will judge sto
Slide 20: Huge Range of Client Work
HUGE RANGE OF CLIENT WORK FIRST QUARTER 2020 TRADING UPDATE 20
Slide 21: Clients: Re-allocating Media and Activity for ROI
CLIENTS: RE-ALLOCATING MEDIA AND ACTIVITY FOR ROI • Digital media to drive sales • National TV (hard to shift) • Earned and paid social media channels • TV and radio • Digital in severely impacted sectors • Newspapers, magazines, cinema, outdoor FIRST QUARTER 2020 TRADING UPDATE 21
Slide 22: Client Diversification
CLIENT DIVERSIFICATION SIGNIFICANTLY IMPACTED BALANCED RESPONSE MORE RESILIENT 24% 22% 54% Automotive 15% Telco, Media, Ent 7% CPG 25% Luxury, Premium 5% Retail 6% Tech 16% Travel, Leisure 4% Financial services 4% Healthcare, Pharma 13% Other 5% -4.0% in Q1 +4.0% in Q1 +4.9% in Q1 Note: all figures
Slide 23: WPP Has a Broad Geographic Spread
WPP HAS A BROAD GEOGRAPHIC SPREAD France Italy India Spain China OUTBREAK RECOVERY Brazil USA Germany UK Australia FIRST QUARTER 2020 TRADING UPDATE 23
Slide 24: China: Rapid Recovery in Economic Activity
CHINA: RAPID RECOVERY IN ECONOMIC ACTIVITY WPP back in the office YoY online retail sales strong 100% 12% 90% 3% 55% 45% Jan-Feb March 5% -16% Up to 23 Jan Lockdown 24/2-20/3 24/3-3/4 7/4-now -21% total online “What we’ve seen in China is a pretty quick bounce back for the consumption of beauty prod
Slide 25: Communities: Strongly Supporting Government and NGO Communication
COMMUNITIES: STRONGLY SUPPORTING GOVERNMENT AND NGO COMMUNICATION FIRST QUARTER 2020 TRADING UPDATE 25
Slide 26: Short Term Focus, Invest for the Long Term
SHORT TERM FOCUS, INVEST FOR THE LONG TERM MANAGE OUR IMMEDIATE RESPONSE INVEST FASTER FOR THE FUTURE Creativity and 1 People 1 Technology Agility and 2 Clients 2 Simplicity Operational 3 Communities 3 effectiveness Culture 4 Financial resilience 4 and Purpose FIRST QUARTER 2020 TRADING UPDATE 26
Slide 27: Other Financial Information
OTHER FINANCIAL INFORMATION
Slide 28: Revenue Less Pass-Through Costs Growth by Region
REVENUE LESS PASS-THROUGH COSTS GROWTH¹ BY REGION LIKE-FOR-LIKE % C. & E. Europe % H1/19 H2/19 Q1/20 5.3 5.2 4.7 UK % H1/19 H2/19 Q1/20 1.2 -0.5 -4.2 North America % H1/19 H2/19 Q1/20 W. Cont. Europe % -7.3 -4.0 -1.9 H1/19 H2/19 Q1/20 -0.2 1.5 -3.7 Asia Pacific % H1/19 H2/19 Q1/20 -0.9 -1.3 -8.6 Afr
Slide 29: BRIC Markets
BRIC MARKETS Mainland China Greater China² Brazil India Russia Headcount 7,000 9,000 5,000 8,000 1,000 REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2020 March -33.0% -29.9% -16.7% -1.1% 0.7% 2020 Q1 -23.4% -21.3% -1.3% 6.1% 11.5% 2019 FY -4.0% -3.8% 9.3% 9.7% 7.9% 1. Like-for-like growth vs prior year fr
Slide 30: Client Sector Mix
CLIENT SECTOR MIX Travel & leisure Luxury & premium 4% 5% Financial services 4% CPG 25% Other 5% Retail 6% Telecom, media & entertainment 7% Automotive 15% Healthcare & pharma 13% Tech 16% % of total top 200 designated clients attributable to each industry for continuing operations. These comprise 5
Slide 31: Impact of FX on Revenue Less Pass-Through Costs
IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS¹ 19/FY Act 20/Q1 Act 20/Q2 Est 20/Q3 Est 20/Q4 Est 20/FY Est 2% • 2020 Q1 currency 1.2% headwind -0.3% 0% • 2020 full year -0.3% -0.4% -1.0% headwind -1.4% at -1.4% latest exchange rates² • 2019 full year currency -3.8% tailwind 1.2% -2% -4% 1. Continu
Slide 32: Effects of Currency
EFFECTS OF CURRENCY STERLING 2020 2019 (WEAKER)/STRONGER US$ 1.28 1.30 -2% € 1.16 1.15 1% • Currency movements accounted for 0.3% Chinese Renminbi 8.9 8.8 1% decrease¹ in revenue less pass-through costs Brazilian Real 5.70 4.90 16% • Reflects overall strength Australian $ 1.95 1.83 7% of £ sterling
Slide 33: Thank You
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