2024 Interim Results

Sequential improvement in LFL growth in Q2. Strong progress against January 2024 strategic objectives and significant value unlocked from sale of majority stake in FGS Global. Full year LFL guidance now -1% to 0% reflecting macro pressures and weakness in China

Key figures (£m)

H1 2024

+/(-) % reported1

+/(-) % LFL2

H1 2023

Revenue

7,227

0.1

2.6

7221

Revenue less pass-through costs

5,599

(3.6)

(1.0)

5,811

Reported:

Operating profit

423

38.2

306

Operating profit margin3

5.9%

1.7pt

4.2%

Diluted EPS (p)

18.8

82.5

10.3

Dividends per share (p)

15.0

0.0

15.0

Headline4

Operating profit

646

(3.0)

0.5

666

Operating profit margin

11.5%

0.0pt

0.1pt

11.5%

Diluted EPS (p)

30.9

(6.6)

33.1

H1 and Q2 financial highlights

  • H1 reported revenue +0.1%, LFL revenue +2.6%. H1 revenue less pass-through costs -3.6%, LFL revenue less pass-through costs -1.0%
  • Q2 LFL revenue less pass-through costs -0.5%, with North America +2.0% and Western Continental Europe +0.3%, offset by the UK -5.3% and Rest of World -2.2%, with growth in India +9.1% offset by a decline in China -24.2%
  • Global Integrated Agencies Q2 LFL revenue less pass-through costs fell 0.6% with GroupM growing 1.4%, offset by a 2.4% decline at integrated creative agencies
  • Top ten clients5 grew 2.5% in H1. CPG, TME6 and automotive client sectors grew well in Q2. Technology client sector stabilising, with a decline of 1.0% LFL in Q2, an improvement from Q1’s -9.0%. Healthcare and retail sectors impacted by 2023 client losses
  • Strong progress on strategic initiatives with new products and solutions launched within WPP Open, our AI-powered marketing operating system, and Burson, GroupM and VML on track to deliver targeted savings
  • Agreement to sell WPP’s majority stake in FGS Global to KKR at an enterprise valuation of $1.7bn, generating total cash proceeds to WPP of c.£604m7 after tax. Proceeds will be used to reduce leverage, implying pro-forma average net debt to EBITDA of c.1.60x8, comfortably within the range of 1.50-1.75x
  • H1 headline operating profit £646m. Headline operating margin of 11.5% (H1 2023: 11.5%), up 0.1pt LFL, reflecting disciplined cost management as we continue to invest in our proposition. H1 reported operating profit £423m up 38.2%, reflecting the above factors and lower restructuring costs of £153m (H1 2023: £267m)
  • $1.7bn net new billings9 (H1 2023: $2.0bn), with Q2 net new billings $0.9bn (Q2 2023: $0.5bn). New client wins included assignments for AstraZeneca, Colgate-Palmolive, J&J and Government of Canada
  • Adjusted net debt as at 30 June 2024 £3.4bn down £0.1bn year-on-year
  • Interim dividend of 15.0p declared (2023: 15.0p)
  • 2024 guidance updated: LFL revenue less pass-through costs of -1% to 0% (previously 0% to 1%), with improvement in headline operating profit margin of 20-40bps (excluding the impact of FX)

Mark Read, Chief Executive Officer of WPP, said:

“At our Capital Markets Day earlier this year we set out our strategy to build on and improve the competitiveness of WPP’s offer. I am very pleased with the progress we have made in the past six months against each of our strategic objectives, particularly our continued investment in AI, the creation of VML and Burson, and the simplification of GroupM. We are strengthening our offer for clients while building a more efficient company.

“Our second quarter performance delivered sequential improvement in net sales10 with continued growth in GroupM, Ogilvy and Hogarth and sequential improvement at Burson, VML and our Specialist Agencies. Importantly, we also saw North America return to growth in the second quarter. That said, we have seen pressure in China and in our project-related businesses which, together with an uncertain macro environment, has led us to moderate our expectations for the full-year.

“The sale of our stake in FGS Global is an excellent outcome less than four years after its creation from three separate businesses within WPP. It will allow us to focus and invest in our core creative transformation offer while significantly strengthening our financial position.

“As a team, our priority continues to be improving our competitiveness by delivering a modern, global, creative and integrated offer for our clients. The steps we have taken since January to integrate our offer, bring in new talent and invest in AI represent strong progress towards delivering on our medium-term financial targets and to shareholders.”

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.

Percentage change in reported sterling.

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.

Reported operating profit divided by revenue (including pass-through costs).

In this press release not all of the figures and ratios used are readily available from the unaudited interim results included in Appendix 1. Management believes these non-GAAP measures, including constant currency and like-for-like growth, revenue less pass-through costs and headline profit measures, are both useful and necessary to better understand the Group’s results. Details of how these have been arrived at are shown in Appendix 4.

Top 10 clients by revenue less pass-through costs in H1 2023. Growth rate includes the impact of a client loss in the healthcare sector.

Telecommunications, Media and Entertainment.

Comprising £557m consideration (after tax) for WPP’s c.50% stake as well as a net £47m inflow for the repayment of a loan from WPP to FGS, less FGS’s cash on balance sheet.

Pro-forma average adjusted net debt to headline EBITDA (last 12 months) (including depreciation of right-of-use assets) of c.1.60x, versus WPP’s average adjusted net debt to headline EBITDA (last 12 months) (including depreciation of right-of-use assets) of c.1.84x at 30 June 2024. Calculated by reducing WPP’s average adjusted net debt over the last twelve months by the expected cash proceeds after tax of c.£604m and reducing headline EBITDA by FGS’s headline EBITDA contribution.

As defined in the glossary on page 45.

“Net sales” refers to revenues less pass-through costs.

WPP 2024 Interim Results PDF 791 KB

For further information:

Investors and analysts Tom Waldron +44 7788 695864 Anthony Hamilton +44 7464 532903 Caitlin Holt +44 7392 280178

irteam@wpp.com

Media Chris Wade +44 20 7282 4600

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

wpp.com/investors