Wpp Plc · LSE:WPP
Wpp — Q3 2006 Earnings Presentation
26 slides from Wpp's earnings presentation, October 2006
Slide 1: Trading Statement for the Third Quarter 2006
WPP Trading Statement for the Third Quarter 2006 October 2006 1
Slide 2: Summary – Year to Date
Third Quarter 2006 Summary – Year to Date • Like-for-like growth was 4.7%, with acquisitions adding 6.3% to give constant currency growth of 11.0%. • Currency movements accounted for a further 1.0%, resulting in reported revenues of 12.0%. • The Group’s Gross Margin “GM” (being revenues less direct
Slide 3: Summary – Third Quarter
Third Quarter 2006 Summary – Third Quarter • Like-for-like growth was 4.1%, with acquisitions adding 3.7% to give constant currency growth of 7.8%. • Currency movements, largely due to the weakness of the US dollar against sterling, reduced revenues by 3.2%. • The Group’s GM showed stronger like-for
Slide 4: Summary – Revenue Growth
Third Quarter 2006 Summary – Revenue Growth % Third YTD Quarter Like-for-like 4.1 4.7 Acquisitions 3.7 6.3 Constant currency 7.8 11.0 Foreign exchange (3.2)¹ 1.0 Reported 4.6 12.0 ¹ Average US $/£ exchange rates for Q3 2006 $1.874, compared to $1.784 for Q3 2005 4
Slide 5: Revenue by Discipline: Third Quarter
Third Quarter 2006 Revenue by Discipline: Third Quarter Revenue 2006 2005 % Change £m £m Reported Constant Like-for- Currency like Advertising, Media Investment Management 656.1 648.3 1.2 4.3 3.6 Information, Insight & Consultancy 213.8 203.5 5.1 8.2 1.9¹ Public Relations & Public Affairs 147.8 134.
Slide 6: Revenue by Discipline: Year to Date
Third Quarter 2006 Revenue by Discipline: Year to Date Revenue 2006 2005 % Change £m £m Reported Constant Like-for- Currency like Advertising, Media Investment Management 2,010.5 1,833.0 9.7 8.5 3.5 Information, Insight & Consultancy 652.7 591.0 10.4 10.0 3.3¹ Public Relations & Public Affairs 438.1
Slide 7: Advertising, Media Investment Management
Third Quarter 2006 Advertising, Media Investment Management • Constant currency revenue growth over 4%. Like-for-like growth almost 4%. • This sector performed well with strong organic growth in Media Investment Management. • On a like-for-like basis Asia Pacific, Africa & Middle East showed above a
Slide 8: Information, Insight and Consultancy
Third Quarter 2006 Information, Insight and Consultancy • Constant currency revenue growth up over 8%, with like- for-like growth up almost 2% and GM up over 5%. • Strong organic growth from Millward Brown, IMRB, Lightspeed, Added Value, Cannondale and Mattson Jack. • Above average growth in North A
Slide 9: Public Relations & Public Affairs
Third Quarter 2006 Public Relations & Public Affairs • Constant currency revenue growth almost 14%. Like-for-like growth almost 6%. • Strong performances at Hill & Knowlton, Burson-Marsteller, Finsbury and Buchanan. 9
Slide 10: Branding & Identity, Healthcare and Specialist Communications
Third Quarter 2006 Branding & Identity, Healthcare and Specialist Communications • Constant currency revenue growth up almost 12%. Like- for-like growth up almost 6%. • Strong organic growth in direct, internet and interactive at Wunderman, G2 and 141 Worldwide; in healthcare at Grey Healthcare and
Slide 11: Revenue by Region: Third Quarter
Third Quarter 2006 Revenue by Region: Third Quarter Revenue 2006 2005 % Change £m £m Reported Constant Like-for- Currency like North America 557.0 539.3 3.3 8.3 4.7 UK 207.2 204.5 1.3 1.3 (1.7)¹ Continental Europe 346.1 333.4 3.8 4.6 3.1 Asia Pacific, Latin America, Africa & Middle East 300.3 271.2
Slide 12: Revenue by Region: Year to Date
Third Quarter 2006 Revenue by Region: Year to Date Revenue 2006 2005 % Change £m £m Reported Constant Like-for- Currency like North America 1,692.4 1,512.7 11.9 10.3 4.6 UK 622.3 593.4 4.9 4.9 0.2¹ Continental Europe 1,087.5 995.8 9.2 9.2 4.1 Asia Pacific, Latin America, Africa & Middle East 872.8 7
Slide 13: Growth by region
Third Quarter 2006 Growth by region • Good growth in all regions other than Continental Europe and the UK. • In the UK, growth in Advertising & Media Investment Management and Public Relations & Public Affairs was in line with the Group. Information, Insight & Consultancy revenues (but not GM) were
Slide 14: Constant Currency Revenue Growth by Country
Third Quarter 2006 Constant Currency Revenue Growth by Country Revenue Growth Countries 20%+ Australia, Greater China, India, Poland, Sweden 15-20% Germany 10-15% Canada, Denmark, Mexico, Norway, Singapore, USA 5-10% Brazil, Spain <5% Belgium, France, Italy, Japan, Netherlands, UK 14
Slide 15: Constant Currency Revenue Growth by Category
Third Quarter 2006 Constant Currency Revenue Growth by Category Revenue Growth Categories 20%+ Entertainment 10-15% Personal Care & Drugs 5-10% Financial Services, Food, Oil, Telecommunications <5% Automotive, Computer, Drinks, Retail 15
Slide 16: Impact of Currency
Third Quarter 2006 Impact of Currency • Currency movements accounted for a 3% difference in revenue. • The average US dollar exchange rate for the Third Quarter of 2006 was $1.874 /£1 compared to $1.784 for the same period last year. The average euro exchange rate for the Third Quarter was €1.471/£1
Slide 17: Uses of Cashflow
Third Quarter 2006 Uses of Cashflow • Average net debt in the first nine months up £134 million to £1,222 million, compared to £1,088 million in 2005, at 2006 exchange rates, reflecting the acquisition of Grey Global Group. • Net debt at 30 September 2006 was £1,332 million, an increase of £49 milli
Slide 18: Uses of Cashflow
Third Quarter 2006 Uses of Cashflow • In line with the Group’s recently announced objective on share buy-backs, 33.6m shares, equivalent to 2.7% of the share capital, have been purchased in the first nine months, at an average price of £6.63 per share and a total cost of £222.5m. Of these shares 5.7
Slide 19: Major New Business Wins – Year to Date
Third Quarter 2006 Major New Business Wins – Year to Date Agency Account Office Billings ($m) MindShare Sprint Nextel USA 750 mec Dreamworks USA 270 MindShare Wrigley USA 200 JWT Kimberly-Clark ¹ Global 200 MindShare Sears ² USA 190 MediaCom Nokia Asia Pacific 150 MediaCom Procter & Gamble Philippin
Slide 20: Major New Business Wins - Year to Date
Third Quarter 2006 Major New Business Wins - Year to Date Agency Account Office Billings ($m) Ogilvy Chiquita Europe 60 Y&R Hitachi Europe 60 Brouillard Ruby Tuesday USA 60 Grey Worldwide Hasbro Games USA 55 JWT Cadbury Adams USA 50 Y&R Royal Canadian Mint Canada 50 MediaCom RBS¹ UK 45 mec Henkel Eu
Slide 21: Major New Business Losses – Year to Date
Third Quarter 2006 Major New Business Losses – Year to Date Agency Account Office Billings ($m) JWT Reckitt Benckiser Global 300 Ogilvy Kimberly-Clark ¹ Global 200 MediaCom Sears ² USA 190 MindShare Vodafone Italy 126 Ogilvy Miller Lite USA 88 Grey Worldwide Panasonic USA 60 mec RBS³ UK 45 mec ntl:t
Slide 22: Net new business wins in the first nine months of 2006
Third Quarter 2006 Net new business wins in the first nine months of 2006¹ US $ millions Creative Media Total Advertising 1,027 3,699 4,726 Other Businesses 783 - 783 Total 2006 1,810 3,699 5,509 ¹ Estimated billings 22
Slide 23: Major new business wins/(losses) since October
Third Quarter 2006 Major new business wins/(losses) since 1 October Agency Account Office Billings ($m) mec Danone UK 75 Ogilvy Unilever Europe 60 WINS Y&R Palm Global 25 mec Blockbuster UK 18 LOSSES mec Danone USA 75 (All billings figures are based on trade press estimates, where available) 23
Slide 24: Acquisitions
Third Quarter 2006 Acquisitions² Faster Growing Markets Quantitative and Digital Bridge (USA) Umagination Labs(USA) The Leverage Group (USA) Nikko Ads (Japan) Emerge (Denmark) Enterprise Nexus (India) ACSR (China) IEG (USA) Always (China) HYLZ (China) Leopard (USA) China Broadband Partners Century H
Slide 25: Acquisitions
Third Quarter 2006 Acquisitions¹ Advertising and Media Public Relations Investment Management cp&z (Germany) Antidote (UK) Dewey Square Group (USA) Mediacom North (UK) Public Strategies Inc. (USA) Result Inc. (Canada) Other DMX Inflight (USA) ¹ Excludes equity step ups 25
Slide 26: WPP
WPP Trading Statement for the Third Quarter 2006 October 2006 26