WPP Interim Results 2013

29 Aug 2013

  • Billings up 5% at £22.7 billion
  • Reportable revenues up 7.1% to over £5.3 billion
  • Like-for-like revenue up 2.4%
  • Operating margin of 12.0% up 0.5 margin points and 0.5 margin points like-for-like
  • Headline profit before interest and tax £637 million up almost 12%
  • Headline profit before tax £524 million (over half a billion pounds sterling in first half for first time) up over 12%
  • Profit before tax £427 million up over 19%
  • Headline diluted earnings per share 28.4p up over 10%
  • Dividends per share 10.56p up 20%, a pay-out ratio of 37% versus 34% last year
  • Targeted dividend pay-out ratio lifted to 45% within two years from current 40%
  • Raising strategic targets for each of faster growing markets and new media sectors to 40-45% from 35-40% over the next five years
  • Including all of associates and investments, revenues total over $23 billion annually and people well over 170,000
Key figures
£ Million H1 2013 ∆ reported1 ∆ constant2 % revenues H1 2012 % revenues
Revenue 5,327 7.1% 5.5% - 4,972 -
Gross Margin 4,884 6.9% 5.3% - 4,568 -
Headline EBITA3 753 10.6% 8.5% 14.1% 682 13.7%
Headline PBIT4 637 11.8% 9.6% 12.0% 570 11.5%
EPS headline diluted5 28.4p 10.1% 6.7% - 25.8p -
Diluted EPS6 21.5p -0.5% -4.7% - 21.6p -
Dividends per share 10.56p 20.0% 20.0% - 8.80p -

First-half and Q2 highlights
  • Billings increased by 5.0% to £22.7bn
  • Revenue growth of 7.1%, with like-for-like growth of 2.4%, 3.1% growth from acquisitions and 1.6% from currency, reflecting a weaker £ sterling. Quarter two has seen significant improvement over the first quarter of the year
  • Constant currency growth in all regions and business segments, except public relations and public affairs, with Q2 improvement in the USA and the UK, partly offset by slower rates of growth in the faster growing markets and the mature markets of Western Continental Europe. Continuing double-digit growth from Latin America and Africa
  • Like-for-like gross margin growth in line with revenue growth at 2.4%, with data investment management (formerly consumer insight) and the United Kingdom growing faster than revenue
  • Headline EBITDA growth of 10.6% delivered through organic revenue growth and by 0.4 margin point improvement, with operating costs up 6.3%, rising less than revenues
  • Headline PBIT increase of 11.8% with PBIT margin rising by 0.5 margin points
  • Gross margin margins, probably a more accurate competitive comparator, also up 0.5 margin points to 13.0%
  • Headline diluted EPS up 10.1% driving a 20% higher interim ordinary dividend of 10.56p, in line with the Company’s previous objective of reaching a 40% pay-out ratio, in the medium term
  • Targeted dividend pay-out ratio raised to 45%, to be reached in two years
  • Average net debt increased by £205m (+7%) to £3.128bn compared to last year, at 2013 constant rates, an improvement over the first four months figure. The higher average net debt figure continues to reflect the timing of significant acquisition payments, largely offset by the conversion, at 30 June, of £390 million of the £450 million Convertible Bond, but with a significant improvement in working capital in July and onwards
  • Creative and effectiveness excellence recognised again in 2013 with the award of the Cannes Lion to WPP for the most creative Holding Company for the third successive year since its initiation, another to Ogilvy & Mather Worldwide for the second consecutive year as the most creative agency network and another to Ogilvy Brazil as the most creative agency. For the second consecutive year, WPP was awarded the EFFIE as the most effective Holding Company
  • Strategy implementation accelerated in a pre- and post-POG (Publicis Omnicom Group) world as sector targets for fast growth markets and new media raised from 35-40% to 40-45% over next five years

Current trading and outlook

  • July 2013 | Revenues up stronger than the first half at 5.0% like-for-like for the month, the highest monthly growth rate this year, with year-to-date like-for-like revenue growth of 2.8%
  • FY 2013 quarter 2 revised forecast | Slight increase in like-for-like revenue growth from the quarter 1 revised forecast, which was itself over 3%, with the second half and third quarter stronger than first half and headline operating margin target, as previously, of 15.3% up 0.5 margin points
  • Focus in 2013 | 1. Revenue growth from leading position in both faster growing geographic markets and digital, “horizontality”, premier parent company creative and effectiveness position, new business strength 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 data investment management, including data analytics and application of new technology; improvement in staff cost/revenue ratio of 0.3 to 0.6 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 margin expansion and from strategically targeted small and medium-sized acquisitions
1 Percentage change in reported sterling
2 Percentage change at constant currency rates
3 Headline earnings before interest, tax, depreciation and amortisation
4 Headline profit before interest and tax
5 Diluted earnings per share based on headline earnings
6 Diluted earnings per share based on reported earnings 

In this press release not all of the figures and ratios used are readily available from the unaudited interim results included in Appendix 1. Where required, details of how these have been arrived at are shown in the Appendices.

Download full WPP Interim Results 2013 (pdf)
 Download Appendix 1 of WPP Interim Results 2013 (pdf)