Wpp Plc · LSE:WPP
Wpp — Q3 2021 Earnings Presentation
35 slides from Wpp's earnings presentation, Oct 28, 2021
Slide 1: Q3 Trading Update
Q3 TRADING UPDATE 28 October 2021
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation contains statements that are, or may be deemed to be, “forward-looking statements”. Forward-looking statements give the Group’s current expectations or forecasts of future events. An investor can identify these statements by
Slide 3: Agenda
AGENDA 1. Q3 HIGHLIGHTS 2. FINANCIAL PERFORMANCE 3. BUSINESS UPDATE 4. Q&A
Slide 4: Very Strong Performance, Beyond a Cyclical Recovery
VERY STRONG PERFORMANCE, BEYOND A CYCLICAL RECOVERY • Q3 LFL1 revenue less pass-through costs +15.7% (Q1 +3.1%, Q2 +19.3%) - GIA +13.5%, PR +16.0%, Specialist Agencies +41.5% - +6.9% LFL over 2019 (Q1: -0.3%, Q2 +1.3%) • Q3 LFL1 revenue less pass-through costs by major market: US +12.4%, UK +16.9%,
Slide 5: Financial Performance
FINANCIAL PERFORMANCE
Slide 6: Revenue Less Pass-Through Costs by Quarter
REVENUE LESS PASS-THROUGH COSTS BY QUARTER CONTINUING OPERATIONS £M Δ REPORTED Δ LFL Δ VS 19 LFL Q1 2,334 (1.4%) 3.1% (0.3%) Q2 2,565 11.5% 19.3% 1.3% H1 4,899 5.0% 11.0% 0.5% Q3 2,640 9.9% 15.7% 6.9% YTD 7,539 6.7% 12.6% 2.6% Q3 2021 TRADING UPDATE 6
Slide 7: Global Integrated Agencies: GroupM Very Strong
GLOBAL INTEGRATED AGENCIES: GROUPM VERY STRONG LFL REVENUE LESS PASS-THROUGH COSTS GROWTH Q3 PERFORMANCE Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 25.0% • +5.9% LFL on Q3 2019 19.2% 20.0% • GroupM +19.0% LFL, +14.6% on Q3 15.0% 13.5% 2019 10.0% 5.9% • Continued double-digit LFL growth
Slide 8: Public Relations: High Demand for Strategic Comms Advice
PUBLIC RELATIONS: HIGH DEMAND FOR STRATEGIC COMMS ADVICE LFL REVENUE LESS PASS-THROUGH COSTS GROWTH Q3 PERFORMANCE Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 20.0% • +12.6% LFL on Q3 2019 16.0% 15.0% • Specialist PR continues to be the 12.9% 12.6% strongest performer 10.0% • Acceleratin
Slide 9: Specialist Agencies: Best-Performing Sector
SPECIALIST AGENCIES: BEST-PERFORMING SECTOR LFL REVENUE LESS PASS-THROUGH COSTS GROWTH Q3 PERFORMANCE Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 50.0% • +21.8% LFL on Q3 2019 41.5% 40.0% • Brand Consulting in strong demand 27.8% • CMI momentum continues 30.0% 21.8% • Growth boosted by C
Slide 10: Major Markets Performance
MAJOR MARKETS PERFORMANCE1 USA UK GERMANY Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 31.8% 34.5% 32.1% 20.3% 16.9% 12.6% 12.4% 9.3% 6.2% 3.9% 2.5% 6.3% 0.7% 1.8% 1.1% (1.2%) (0.5%) (1.8%) (0.8%) (1.9
Slide 11: Other Major Markets Performance
OTHER MAJOR MARKETS PERFORMANCE1 INDIA FRANCE CANADA Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 30.0% 33.5% 28.0% 27.9% 16.1% 15.7% 7.1% 14.4% 9.2% 5.6% 3.6% 6.0% 8.7% 0.9% 0.5% (0.5%) (1.0%) (2.6%)
Slide 12: Significant Improvement in Net Debt Year-on-Year (£m)
SIGNIFICANT IMPROVEMENT IN NET DEBT YEAR-ON-YEAR (£M) -696 -1,540 -1,629 -2,318 Notes: - Net debt at 30 September 2020 was £2.6 billion at 2021 exchange rates, leading to a year- on-year reduction in net debt to September 2021 of £1.0 billion - Itemised movements in net debt represent management fig
Slide 13: Guidance and Buyback
GUIDANCE AND BUYBACK • Full year 2021 LFL revenue less pass-through costs growth now expected to be 11.5-12.0%, up from 9-10% • Headline operating margin slightly above 14% • £448 million share buybacks year-to-date - £600 million by year-end - Plan to continue at a similar rate up to 2021 prelimina
Slide 14: Business Update
BUSINESS UPDATE
Slide 15: Ongoing Strategic Progress
ONGOING STRATEGIC PROGRESS SATALIA FINSBURY GLOVER HERING/SVC NUMERATOR • AI-driven solutions in • Merger with SVC • Kantar significantly resource optimisation • Creates the world’s strengthens US presence • Clients include leading strategic • Numerator: digital panel Unilever, Tesco and communicati
Slide 16: Our Work: Sky Glass
OUR WORK Sky Glass AKQA Q3 2021 TRADING UPDATE 16
Slide 17: Our Work: Blue Paradox/SCJ
OUR WORK Blue Paradox/SCJ Ogilvy Q3 2021 TRADING UPDATE 17
Slide 18: Our Work: Mondelez Diwali
OUR WORK Mondelez Diwali Ogilvy Q3 2021 TRADING UPDATE 18
Slide 19: Industry-Leading Partnerships
INDUSTRY-LEADING PARTNERSHIPS #1 Google Marketing Global Launched Snapchat First-of-its-kind global Platform Partner ‘AR Lab’ partnership agency partnership with >6,500 Google-certified consultants TikTok and practitioners X Global-first collaboration to Global Salesforce Partner Sitecore’s Global a
Slide 20: Strong New Business Performance
STRONG NEW BUSINESS PERFORMANCE Selected wins/retentions since August Selected losses since August ACCOUNT M/C1 REGION WPP AGENCY ACCOUNT M/C REGION WPP AGENCY M Global M NA 2 2 M Global M Global M Global C NA M Europe and APAC M 6 markets C NA M APAC C Europe C NA M NA M APAC M Europe M APAC M Glob
Slide 21: Year-to-Date Media New Business
YEAR-TO-DATE MEDIA NEW BUSINESS Source: COMvergence. Provisional data Q3 2021 TRADING UPDATE 21
Slide 22: Summary and Outlook
SUMMARY AND OUTLOOK • Very strong quarter; raising guidance for the full year again • Ongoing execution of strategy: - Targeted acquisitions in growth areas - Creating global leaders in the WPP portfolio • Good momentum into 2022: - Strong new business performance, retaining key accounts - Leveragin
Slide 23: Q&A
Q&A
Slide 24: Other Financial Information
OTHER FINANCIAL INFORMATION
Slide 25: Revenue Less Pass-Through Costs Growth vs Prior Year
REVENUE LESS PASS-THROUGH COSTS GROWTH VS PRIOR YEAR Q1 Q2 Q3 YTD Continuing Operations: Reported (1.4%) Reported 11.5% Reported 9.9% Reported 6.7% FX (4.3%) FX (7.5%) FX (5.4%) FX (5.6%) Acquisitions/ (0.2%) Acquisitions/ (0.3%) Acquisitions/ (0.4%) Acquisitions/ (0.3%) disposals disposals disposal
Slide 26: Revenue Less Pass-Through Costs by Sector (Q3)
REVENUE LESS PASS-THROUGH COSTS BY SECTOR1 THIRD QUARTER 2021 £M 2020 £M Δ REPORTED Δ LFL Global Integrated Agencies 2,185 2,016 8.3% 13.5% Public Relations 231 210 10.4% 16.0% Specialist Agencies 224 175 27.9% 41.5% Total Continuing Operations 2,640 2,401 9.9% 15.7% 1. Continuing operations During
Slide 27: Revenue Less Pass-Through Costs by Region (Q3)
REVENUE LESS PASS-THROUGH COSTS BY REGION1 THIRD QUARTER 2021 £M 2020 £M Δ REPORTED Δ LFL North America 975 922 5.6% 12.2% UK 362 311 16.4% 16.9% Western Continental Europe 562 493 14.0% 21.5% Asia Pacific, Latin America, Africa & Middle 741 675 9.9% 15.6% East and Central & Eastern Europe Total Con
Slide 28: Revenue Less Pass-Through Costs by Sector (Nine Months)
REVENUE LESS PASS-THROUGH COSTS BY SECTOR NINE MONTHS YEAR-TO-DATE 2021 £M 2020 £M Δ REPORTED Δ LFL Global Integrated Agencies 6,254 5,913 5.8% 11.8% Public Relations 660 636 3.9% 10.3% Specialist Agencies 625 520 20.1% 24.9% Total Continuing Operations 7,539 7,069 6.7% 12.6% 1. Continuing operation
Slide 29: Revenue Less Pass-Through Costs by Region (Nine Months)
REVENUE LESS PASS-THROUGH COSTS BY REGION NINE MONTHS YEAR-TO-DATE 2021 £M 2020 £M Δ REPORTED Δ LFL North America 2,792 2,779 0.5% 9.1% UK 1,042 897 16.2% 16.9% Western Continental Europe 1,612 1,412 14.1% 17.2% Asia Pacific, Latin America, Africa & Middle 2,093 1,981 5.7% 12.3% East and Central & E
Slide 30: Revenue Less Pass-Through Costs Growth by Region Like-for-Like
REVENUE LESS PASS-THROUGH COSTS GROWTH¹ BY REGION LIKE-FOR-LIKE % C. & E. Europe % Q1 Q2 Q3 YTD 9.5 20.6 11.9 14.0 UK % North America % Q1 Q2 Q3 YTD 3.9 31.8 16.9 16.9 Q1 Q2 Q3 YTD 1.6 13.7 12.2 9.1 W. Cont. Europe % Q1 Q2 Q3 YTD 3.7 27.1 21.5 17.2 Asia Pacific % Q1 Q2 Q3 YTD 4.7 11.7 12.6 9.8 Afric
Slide 31: BRIC Markets Performance
BRIC MARKETS PERFORMANCE1 CHINA GREATER CHINA² BRAZIL Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 29.8% 29.6% 25.1% 19.0% 18.4% 18.0% 8.5% 11.3% 7.1% 5.5% 3.5% 3.1% 1.4% (0.4%) (0.2%) (3.1%) (1.7%) (1
Slide 32: Client Sector Analysis
CLIENT SECTOR ANALYSIS Govt, Public Sector & Non-Profit Travel & Leisure Other +56.2% +29.6% +18.9% 3% Financial 4% Services CPG 6% +6.4% +2.3% 23% Telecom, Media & 6% Third quarter revenue less Entertainment +17.1% pass-through costs growth 7% by client sector Retail +18.9% 10% 19% Tech & Digital S
Slide 33: Debt Maturity Profile at Sept 30, 2021
DEBT MATURITY PROFILE £M AT SEPT 30, 2021 £ TOTAL £ TOTAL CREDIT DRAWN ◼ £ bonds £400m (2.875% Sep ’46) 400 400 700 ◼ US bond $220m (5.625% Nov ’43) 163 163 600 ◼ US bond $93m (5.125% Sep ’42) 69 69 ◼ £ bonds £250m (3.75% May ’32) 250 250 500 ◼ Eurobonds €600m (1.625% Mar ’30) 516 516 400 ◼ Eurobond
Slide 34: Effects of Currency
EFFECTS OF CURRENCY £ STRONGER THIRD QUARTER 2021 2020 /(WEAKER) • Currency movements US$ 1.38 1.29 7% accounted for 5.4% € 1.17 1.11 6% decrease¹ in revenue less pass-through costs Chinese Renminbi 8.92 8.94 - • £ stronger against most Brazilian Real 7.21 6.95 4% currencies, particularly the US$ an
Slide 35: Impact of FX on Revenue Less Pass-Through Costs
IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS¹ • YTD currency 20/FY Act 21/Q1 Act 21/Q2 Act 21/Q3 Act 21/Q4 Est² 21/FY Est 0% headwind (5.6%) (1.2%) (1%) • 2020 full year headwind (1.2%) (2%) (4.3%) (4.2%) (5.4%) (5.2%) • 2021 full year currency (3%) headwind (5.2%) at (4%) (7.5%) latest exchange