WPP 2017 Preliminary Results

1 Mar 2018

Preliminary results for the year ended December 31 2017 (pdf)

  • Reported billings up 0.6% at £55.563 billion, down 3.9% in constant currency and down 5.4% like-for-like
  • Reported revenue up 6.1% at £15.265 billion, up 1.7% at $19.703 billion, down 0.6% at €17.427 billion and up 4.9% at ¥2.209 trillion
  • Constant currency revenue up 1.6%, like-for-like revenue down 0.3%
  • Constant currency revenue less pass-through costs1 (previously known as net sales) up 1.4%, like-for-like down 0.9%
  • Reported revenue less pass-through costs1 margin (previously known as net sales margin) of 17.3%, down 0.1 margin points against last year, flat on a constant currency and like-for-like basis, in line with the revised full year margin target
  • Headline EBITDA £2.534 billion, up 4.7%, up 1.2% in constant currency
  • Headline profit before interest and tax £2.267 billion, up 4.9% and up 1.5% in constant currency
  • Headline profit before tax £2.093 billion, up 5.4% and up 1.9% in constant currency
  • Profit before tax £2.109 billion, up 11.6%, up 7.7% in constant currency
  • Profit after tax £1.912 billion, up 27.4%, up 22.6% in constant currency
  • Headline diluted earnings per share of 120.4p, up 6.4%, up 2.7% in constant currency
  • Return on equity at 16.9% in 2017, up significantly from 16.2% in 2016 versus a weighted average cost of capital of 6.3% in 2017, down from 6.4% in 2016
  • Dividends per share of 60.0p, up 6.0%, a pay-out ratio of 50% in line with last year and the target pay-out ratio
  • Net debt £4.483 billion at 31 December 2017, an increase of £352 million on same date in 2016, with average net debt in 2017 at £5.143 billion against £4.340 billion in 2016, primarily reflecting the weakness of sterling, with the average net debt to EBITDA ratio at 2.0x, the top-end of the target range
  • Net new business of $6.330 billion in the year continuing the good overall performance seen in the first nine months and leading positions in the net new business tables
  • Above budget, but slow start to 2018, with January like-for-like revenue flat and revenue less pass-through costs1 down 1.2%
  • Acceleration of strategic focus on simplification of structure, client and country management and enterprise-wide alignment of digital systems, platforms and capabilities

The Group has changed the description of ‘net sales’ to ‘revenue less pass-through costs’ based on the upcoming adoption of new accounting standards and recently issued regulatory guidance and observations. There has been no change in the way that this measure is calculated

Commenting on the 2017 results announcement Sir Martin Sorrell, CEO of WPP, said:

“2017 for us was not a pretty year, with flat like-for-like, top-line growth, and operating margins and operating profits also flat, or up marginally.

“The major factors influencing this performance were probably the long-term impact of technological disruption and more the short-term focus of zero-based budgeters, activist investors and private equity than, we believe, the suggested disintermediation of agencies by Google and Facebook or digital competition from consultants.

"In this environment, the most successful agency groups will be those who offer simplicity and flexibility of structure to deliver efficient, effective solutions – and therefore growth – for their clients. With this in mind, we are now accelerating the implementation of our strategy for the Group.

"No company in the world of marketing or business transformation has a greater or more varied repertory of talent and capabilities than WPP. Our strength, however, resides not only in the scale and variety of those skills, but in our unique ability to combine them in service of our clients’ growth – which is why most of the world’s leading companies choose WPP to provide them with communications services.

"For many years we have placed ‘horizontality’ at the heart of our strategy by presenting clients with tailor-made and seamlessly integrated offers to meet their specific requirements. Over the last year, we have begun to apply that philosophy to the structure of the Group itself by simplifying a number of our operations.

“As our industry continues to undergo fundamental change, we are upping the pace of WPP’s development from a group of individual companies to a cohesive global team dedicated to the core purpose of driving growth for clients.

“As we build an increasingly unified WPP, we are focusing on a number of areas that will allow us to deploy our deep expertise with greater flexibility, efficiency and speed. These include: further simplification of our structure; stronger client co-ordination across the whole of WPP, including greater responsibility and authority for global client teams and country managers; the development of key cross-Group capabilities in digital marketing, digital production, eCommerce and shopper marketing; further sharing of functions, systems and platforms across the Group; and the development and implementation of senior executive incentives to align them even more closely to Group performance.

“We start this new phase of our journey from a position of market leadership, and with total confidence in the enduring value of what we offer our clients. We will report at every opportunity on our progress.”

Download the full release here

For further information:

Sir Martin Sorrell
Paul Richardson
Lisa Hau
Chris Wade
+44 20 7408 2204

Kevin McCormack
Fran Butera
Juliana Yeh
+1 212 632 2235
+852 2280 3790>

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