WPP First Quarter Trading Statement

26 Apr 2013

  • Reported revenues in sterling up almost 6% at £2.532 billion
  • Reported revenues in dollars up over 4% at $3.917 billion and in euros up 3.6% at €2.970 billion
  • Constant currency revenues up over 5%
  • Like-for-like revenues up over 2%
  • First quarter profits and operating margin above budget and well ahead of last year

Quarter 1 highlights
  • Revenue growth of 5.9%, with like-for-like growth of 2.1%, 3.0% growth from acquisitions and 0.8% from currency, reflecting a weaker £ sterling. Quarter one of 2013 showed a similar pattern to the final quarter of 2012 with strong like-for-like growth in Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe and advertising and media investment management and sub-sector direct, digital and interactive
  • Constant currency growth in all regions and business sectors, except public relations and public affairs, characterised by particularly strong growth geographically in the United Kingdom and Asia Pacific, Latin America and Africa and Central and Eastern Europe and functionally in advertising and media investment management and sub-sector direct, digital and interactive
  • Like-for-like gross margin1 growth of 1.9%, slightly lower than revenues as the scale of digital activities increased
  • The number of people in the business continues to be managed effectively, falling 0.4%, like-for-like, since 1 January 2013 and by 0.5% on average in the first quarter, whilst revenues rose 2.1%
  • Average net debt increased by £331m (-12%) to £3.015 billion reflecting not only significant acquisition payments last year, (chiefly AKQA), partly offset by an improvement in the underlying relative working capital position since the 2012 year end
  • Net new business of $1.504 billion in the first quarter, compared to $1.855 billion in the first quarter last year and in line with the quarterly average in 2012 of approximately $1.5 billion. A number of very significant new business decisions are awaited

Current trading and outlook

  • FY 2013 quarter 1 preliminary revised forecasts | Ahead of budget, with like-for-like revenue and gross margin growth above budget and a headline operating margin target of 15.3% up 0.5 margin points
  • Dual focus in 2013 | 1. Revenue growth from leading position in faster growing geographic markets and digital, premier parent company creative position, new business, “horizontality” and strategically targeted acquisitions; 2. Continued emphasis on balancing revenue growth with headcount increases and improvement in staff costs/revenue ratio to enhance operating margins
  • Long-term targets reaffirmed | Above industry revenue growth due to geographically superior position in new markets and functional strength in new media and consumer insight, including data analytics and application of new technology; improvement in staff costs/revenue ratio of 0.3 to 0.6 margin points p.a. depending on revenue and gross margin growth; operating margin expansion of 0.5 margin points or more; and PBIT growth of 10% to 15% p.a. from organic growth, margin expansion and strategically targeted small and medium-sized acquisitions
1 Gross margin is revenue less direct costs 


Download full WPP Quarterly Trading Update 2013 (pdf)



For further information:
Sir Martin Sorrell }
Paul Richardson }
Chris Sweetland } +44 20 7408 2204
Feona McEwan }
Chris Wade }

Kevin McCormack }
Fran Butera } +1 212 632 2235

www.wppinvestor.com  

This announcement has been filed at the Company Announcements Office of the London Stock Exchange and is being distributed to all owners of Ordinary shares and American Depository Receipts. Copies are available to the public at the Company’s registered office.
 
The following cautionary statement is included for safe harbour purposes in connection with the Private Securities Litigation Reform Act of 1995 introduced in the United States of America. This announcement may contain forward-looking statements within the meaning of the US federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially including adjustments arising from the annual audit by management and the Company’s independent auditors. For further information on factors which could impact the Company and the statements contained herein, please refer to public filings by the Company with the Securities and Exchange Commission. The statements in this announcement should be considered in light of these risks and uncertainties.

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