Third Quarter Trading Update

26 Oct 2023

Third quarter performance impacted by the continuation of second quarter trends. Launching the world’s largest creative agency, VML, to enhance our offer to clients and simplify WPP. Now expect 2023 LFL growth of around 0.5-1.0% with margin of 14.8-15.0% at 2022 rates.


 £m % reported1 % LFL2
Third Quarter      
Revenue
 3,508
 (1.8)
 2.3
Revenue less pass-through costs
 2,837
 (5.0)
 (0.6)
Year to date
      
Revenue
 10,729
 3.9
 3.1
Revenue less pass-through costs
 8,649
 1.8
 1.2
  • Trading highlights: Q3 revenue -1.8%; LFL revenue +2.3%
  • Q3 LFL revenue less pass-through costs -0.6% with growth in UK, Western Continental Europe and Rest of World, offset by declines in North America, with continued weakness from technology clients and in China
  • Global Integrated Agencies grew revenue less pass-through costs +0.1% in Q3 (YTD +1.5%) with integrated creative agencies declining -1.1% (YTD -0.9%). GroupM grew +1.6% in Q3 (YTD +4.6%) with low-single digit growth in the US and UK
  • $1.4bn net new business won in Q3, including from Estée Lauder, Hyatt, Lenovo, Nestlé, Unilever and Verizon. $3.4bn net new business won year-to-date
  • Strengthened offer: Two significant moves to further strengthen our competitive offer, simplify our business and benefit from scaled technology platforms:
    • Launch of VML, the world’s largest creative agency with world-class creativity and deep expertise in commerce, data and technology
    • Further integration of GroupM with common products and single technology platform, streamlining of operations and back-office functions supporting client-facing agencies
    • Together these moves are expected to drive stronger revenue growth and net annualised cost savings of at least £100m in FY25 with a part-year benefit in FY24 
  • Outlook: 2023 guidance updated: LFL revenue less pass-through costs growth now expected to be around 0.5-1.0% (previously 1.5-3.0%); with headline operating margin of 14.8-15.0% (excluding the impact of FX) (previously around 15.0%)
  • WPP intends to hold a Capital Markets Day in January 2024 to update investors and analysts on its strategic roadmap to drive growth, further efficiencies and margin expansion over the next three to five years 

Mark Read, Chief Executive Officer of WPP, said:

“In a world being rapidly reshaped, we need to continue to evolve our offer to clients and simplify our business. I am excited by the creation of the world’s largest creative agency, VML, and the continued evolution of GroupM. Both these developments will strengthen our offer to clients, simplify the integration of our services and maximise the returns on our ongoing investments in AI and technology.

“Our top-line performance in Q3 was below our expectations and continued to be impacted by the cautious spending trends we saw in Q2, particularly across technology clients with more impact from this felt in GroupM over the summer than the first half.

“We continue to win both creative and media assignments from leading global companies including significant wins in the third quarter with Estée Lauder (media), Hyatt (creative), Lenovo (creative), Nestlé (media) and Verizon (creative). Our net new business performance of $1.4bn in the quarter showed sequential improvement after a tougher first half.

“We will provide more detail on today’s announcements, our strategic roadmap and actions to drive growth, further efficiencies and margin expansion at our Capital Markets Day in January.”

This announcement contains information that qualifies or may qualify as inside information. The person responsible for arranging the release of this announcement on behalf of WPP plc is Balbir Kelly-Bisla, Company Secretary.

WPP 2023 Third Quarter Trading Update press release PDF 319.7 KB

 

  1. Percentage change in reported sterling vs prior year.
  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, adjusted to include the results of acquisitions and disposals for the commensurate period in the prior year. Both periods exclude results from Russia.

 

For further information:

Investors and analysts
Tom Waldron +44 7867 975920
Anthony Hamilton +44 7464 532903

[email protected]

Media
[email protected] +44 20 7282 4600

Richard Oldworth, +44 7710 130 634
Buchanan Communications +44 20 7466 5000

wpp.com/investors