Strong start to the year. Return to
like-for-like growth in all business segments and most major
markets. 2021 guidance reiterated.
WPP (NYSE: WPP) today reported its 2021 First Quarter Trading
Update.
£ million
+/(-)% reported1
+/(-)% LFL2
First Quarter
Revenue
2,897
1.8
6.3
Revenue less pass-through costs
2,334
(1.4)
3.1
- Q1 revenue +1.8%; LFL revenue +6.3%
- Q1 LFL revenue less pass-through costs +3.1%
- Top five markets Q1 LFL revenue less pass-through costs: US
+0.7%; UK +3.9%; Germany +2.5%; Greater China +18.4%; India
-0.5%
- LFL revenue less pass-through costs by business sector: Global
Integrated Agencies +2.8% (GroupM +5.8%), Public Relations +2.0%,
Specialist Agencies +7.5%
- $1.3 billion net new business won
- Continued progress against strategic plan: technology/commerce
acquisitions, buy-in of WPP AUNZ minority, launch of Choreograph,
share buyback ongoing
- 2021 guidance reiterated
Mark Read, Chief Executive Officer of WPP, said:
“WPP has had a strong start to the year with a return to growth
in all business lines and most major markets. Our strengths in
ecommerce, digital media and technology, combined with our ongoing
investment in creative talent, are resonating with clients as their
markets recover and they seek to transform their offer for future
growth. This week’s launch of our new global data company,
Choreograph, adds a further dimension to the WPP proposition as
clients look for trusted partners to help them navigate a
fast-changing data landscape.
“We have already secured a number of important assignments in
2021, including Absolut (global creative), JP Morgan Chase (global
media), Salesforce (technology operations) and Sam’s Club (US
creative). We were also delighted to renew our valued partnership
with the US Navy.
“Last week we made an industry-leading commitment to target net
zero carbon emissions across our entire supply chain by 2030,
putting our $60 billion of media billings behind this initiative.
We will work with our clients, media owners and the industry on
this collaborative effort.
“The roll-out of vaccines is improving visibility in many
markets, although there is inevitably uncertainty over the pace of
recovery. We are making good progress on our transformation
programme, which will deliver significant efficiencies to reinvest
in growth, and are confident of delivering our growth and
profitability guidance for 2021.”
Overview
During the first quarter, client spend on marketing services
showed increasing resilience despite further waves of the
coronavirus in some markets, and we achieved like-for-like growth
in 15 of our top 20 countries. The vast majority of our people are
still working from home, but continue to deliver an outstanding
service for clients despite the challenges faced.
Revenue in the first quarter was up 1.8% at £2.9 billion. On a
constant currency basis, revenue was up 6.0% year-on-year. Net
changes from acquisitions and disposals had a negative impact of
0.3% on growth, leading to a like-for-like performance, excluding
the impact of currency and acquisitions, of 6.3%.
Revenue less pass-through costs in the first quarter was down
1.4% year-on-year to £2.3 billion, and up 2.9% on a constant
currency basis. Excluding the impact of acquisitions and disposals,
like-for-like growth was 3.1%. All regions and business segments
witnessed an improving trend over the fourth quarter of 2020.
Regional review
Revenue analysis
£ million
Q1 2021
Q1 2020
+/(-) % reported
+/(-) % LFL
N. America
1,063
1,102
(3.5)
3.9
United Kingdom
434
411
5.6
5.7
W. Cont Europe
612
561
9.0
7.4
AP, LA, AME, CEE3
788
773
1.9
9.1
Total Group
2,897
2,847
1.8
6.3
Revenue less pass-through costs analysis
£ million
Q1 2021
Q1 2020
+/(-) % reported
+/(-) % LFL
N. America
886
938
(5.6)
1.6
United Kingdom
321
313
2.4
3.9
W. Cont Europe
492
467
5.3
3.7
AP, LA, AME, CEE
635
648
(1.9)
4.7
Total Group
2,334
2,366
(1.4)
3.1
North America saw like-for-like revenue less pass-through
costs up 1.6%. The US returned to growth, with VMLY&R as the
best performer. Canada grew strongly, on the back of new business
wins.
In the United Kingdom, like-for-like revenue less
pass-through costs was up 3.9%, a significant improvement on 2020’s
full-year performance. GroupM, VMLY&R and AKQA Group all
performed well, growing double digits year-on-year.
Western Continental Europe like-for-like revenue less
pass-through costs grew by 3.7%. Italy, Germany, the Netherlands
and Denmark all grew in the first quarter, while France and Spain
faced relatively strong comparative periods.
Asia Pacific, Latin America, Africa & the Middle East and
Central & Eastern Europe like-for-like revenue less
pass-through costs was up 4.7%. There was strong growth in Latin
America and Eastern Europe, while the Middle East and Africa were
down year-on-year. In Asia Pacific, China recovered very strongly,
driven mainly by GroupM, after the significant impact of COVID-19
in the comparative period.
Business sector review
During 2020, we announced the intention to combine Grey and AKQA
into AKQA Group, and to bring Geometry and GTB into VMLY&R, and
International Healthcare into VMLY&R and Ogilvy. As a result
AKQA, Geometry, GTB and International Healthcare are now reported
within Global Integrated Agencies, having previously been reported
within Specialist Agencies. 2020 comparable revenue and revenue
less pass-through costs figures have been adjusted by a total of
£246 million and £225 million respectively to reflect this
change.
Revenue analysis
£ million
Q1 2021
Q1 2020
+/(-) % reported
+/(-) % LFL
Global Integrated Agencies
2,435
2,400
1.5
6.1
Public Relations
214
223
(4.0)
1.0
Specialist Agencies
248
224
10.5
12.9
Total Group
2,897
2,847
1.8
6.3
Revenue less pass-through costs analysis
£ million
Q1 2021
Q1 2020
+/(-) % reported
+/(-) % LFL
Global Integrated Agencies
1,934
1,970
(1.8)
2.8
Public Relations
206
212
(3.0)
2.0
Specialist Agencies
194
184
5.3
7.5
Total Group
2,334
2,366
(1.4)
3.1
Global Integrated Agencies like-for-like revenue less
pass-through costs was up 2.8%. VMLY&R was the best performer,
continuing to demonstrate improving business momentum. GroupM
recovered strongly, with like-for-like revenue less pass-through
costs up 5.8%. Wunderman Thompson’s performance significantly
improved quarter-on-quarter, returning to growth in the first
quarter of the year. Of the other integrated agencies, Ogilvy and
AKQA Group showed an improved performance compared with the fourth
quarter of 2020, but were still down year-on-year.
Public Relations like-for-like revenue less pass-through
costs was up 2.0%. Specialist Public Relations, driven by Finsbury
Glover Hering, and H+K both saw growth in the first quarter.
Specialist Agencies, with like-for-like revenue less
pass-through costs up 7.5%, was the best performing sector. All of
our main agencies saw improved performance, with our Brand
Consulting businesses, Landor, Superunion and DesignBridge, growing
year-on-year. CMI Media, our healthcare media business, saw strong
growth year-on-year off the back of new client wins.
Balance sheet highlights
Average net debt in the first three months of 2021 was £1.1
billion, compared to £2.2 billion in the first quarter of 2020, at
2021 exchange rates, a decrease of £1.1 billion. Net debt at 31
March 2021 was £1.4 billion, compared to £0.7 billion on 31
December 2020, at 2021 exchange rates, an increase of £0.7 billion,
driven largely by seasonal net working capital movements. We spent
£83 million on share purchases in the first quarter, of which £65
million related to the Kantar share buyback.
Progress on strategic plan
During the first quarter, we continued to make good progress on
our plans to accelerate growth. We announced the acquisitions of
DTI, a digital innovation and software engineering business in
Brazil, and NN4M, a leading mobile commerce partner for global
brands. In addition, our 40% associate Kantar announced the
acquisition of Numerator, a technology-driven consumer and market
intelligence company.
We have also made further structural and organisational changes
which simplify WPP and improve the way we go to market and serve
clients. Yesterday, we announced the creation of Choreograph, a new
global data company, bringing together the specialist data units of
GroupM and Wunderman Thompson into a single company with global
reach, accessible to all WPP clients and companies. In addition, we
have recently combined separate operations into a single brand
research and analytics platform under BAV, creating the leading
source of brand analytics on over 60,000 brands worldwide. This
will enable us to better integrate brand data into our data
analytics offer across WPP companies.
Finally, we expect to complete the transaction to take 100%
ownership of WPP AUNZ in May 2021, further simplifying the group
structure.
Outlook
Like-for-like revenue less pass-through costs in the first
quarter has been strong and we continue to exercise tight cost
control. While these are encouraging trends, there remains
continued uncertainty across a number of our markets. We reiterate
our guidance for 2021:
- Organic growth (defined as like-for-like revenue less
pass-through costs growth) of mid-single-digits %
- Headline operating margin in the range of 13.5-14.0%
- Capex £450-500 million, and a net working capital outflow of
£200-300 million
As indicated at our preliminary results in March 2021, our
current projections for foreign exchange movements imply a drag of
approximately 4-5 percentage points to reported revenue less
pass-through costs from the strength of sterling year-on-year. This
would also have a small impact on headline operating margin, as a
result of our higher weighting of sterling costs.
Cautionary statement regarding forward-looking
statements
This document contains statements that are, or may be deemed to
be, “forward-looking statements”. Forward-looking statements give
the Group’s current expectations or forecasts of future events. An
investor can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use words such
as ‘anticipate’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘project’,
‘plan’, ‘believe’, ‘target’ and other words and terms of similar
meaning in connection with any discussion of future operating or
financial performance.
These forward-looking statements may include, among other
things, plans, objectives, projections and anticipated future
economic performance based on assumptions and the like that are
subject to risks and uncertainties. As such, actual results or
outcomes may differ materially from those discussed in the
forward-looking statements. Important factors which may cause
actual results to differ include but are not limited to: the
unanticipated loss of a material client or key personnel, delays or
reductions in client advertising budgets, shifts in industry rates
of compensation, regulatory compliance costs or litigation, natural
disasters or acts of terrorism, the Company’s exposure to changes
in the values of other major currencies (because a substantial
portion of its revenues are derived and costs incurred outside of
the UK) and the overall level of economic activity in the Company’s
major markets (which varies depending on, among other things,
regional, national and international political and economic
conditions and government regulations in the world’s advertising
markets). In addition, you should consider the risks described
under Item 3D ‘Risk Factors’ in the Group’s Annual Report on Form
20-F/A for 2019 and any impacts of the COVID-19 pandemic which
could also cause actual results to differ from forward-looking
information. In light of these and other uncertainties, the
forward-looking statements included in this document should not be
regarded as a representation by the Company that the Company’s
plans and objectives will be achieved. Other than in accordance
with its legal or regulatory obligations (including under the
Market Abuse Regulation, the UK Listing Rules and the Disclosure
Guidance and Transparency Rules of the Financial Conduct
Authority), the Group undertakes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise. The reader should, however, consult any
additional disclosures that the Group may make in any documents
which it publishes and/or files with the SEC. All readers, wherever
located, should take note of these disclosures. Accordingly, no
assurance can be given that any particular expectation will be met
and investors are cautioned not to place undue reliance on the
forward-looking statements.
Any forward-looking statements made by or on behalf of the Group
speak only as of the date they are made and are based upon the
knowledge and information available to the Directors on the date of
this document.
_____________________________ 1 Percentage change in reported
sterling vs prior year from continuing operations. 2 Like-for-like.
LFL comparisons are calculated as follows: current year, constant
currency actual results (which include acquisitions from the
relevant date of completion) are compared with prior year, constant
currency actual results from continuing operations, adjusted to
include the results of acquisitions and disposals for the
commensurate period in the prior year. 3 Asia Pacific, Latin
America, Africa & Middle East and Central & Eastern
Europe.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428005447/en/
Investors and analysts Peregrine Riviere +44 7909 907193
Caitlin Holt +44 7392 280178 Fran Butera (US) +1 914 484 1198
Media Chris Wade +44 20 7282 4600 Richard Oldworth, +44 7710
130 634 Buchanan Communications +44 20 7466 5000
wpp.com/investors
WPP (NYSE:WPP)
Historical Stock Chart
From Mar 2024 to Apr 2024
WPP (NYSE:WPP)
Historical Stock Chart
From Apr 2023 to Apr 2024