Wpp Plc · LSE:WPP

Wpp — Q3 2013 Earnings Presentation

42 slides from Wpp's earnings presentation, October 2013

  1. Slide 1: Trading Statement for the Third Quarter 2013

    Trading Statement for the Third Quarter 2013 October 2013 1

  2. Slide 2: Third Quarter 2013 Summary

    Third Quarter 2013 Summary  Reported revenues up 7.4% at £2.680 billion with like-for-like revenues up 5.0% and constant currency revenues up 6.4%.  Operating profits and operating margins in first nine months in line with budget and target and ahead of last year.  Net debt at 30 September 2013 d

  3. Slide 3: Summary – Revenue Growth

    Third Quarter 2013 Summary – Revenue Growth Third % change Quarter YTD Like-for-like 5.0 3.3 Acquisitions 1.4 2.5 Constant currency 6.4 5.8 Foreign exchange 1.0 1.4 Reportable sterling 7.4¹ 7.2 Reportable US dollars² 5.4 4.9 Reportable euros² -0.4 2.1 1 Average Q3 2013 exchange rate for US$/£ was $1

  4. Slide 4: The Singlehurst 2 year organic growth model

    Third Quarter 2013 The “Singlehurst” 2 year organic growth model¹ Organic growth rate WPP OMC PUB IPG Q4/12 7.0 7.9 6.8 3.2 Q1/13 6.1 8.0 5.4 5.0 Q2/13 5.9 7.9 6.6 3.0 Q3/13 6.9 7.6 5.5 2.0 Range 6-7 7-8 5-7 2-5 2012 Margin 15.3² 13.4 16.1 9.8 2013 Margin³ 15.9² 13.4 16.3 9.8 1 For each quarter this

  5. Slide 5: Parent Company Performance Comparison – North America

    Parent Company Performance Comparison North America – 5 Year TSR 120 214.5% 204.4% 100 Share Price ($) (rebased to WPP) 80 96.6% 60 77.0% 40 20 0 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 WPP ADR Omnicom Interpublic S&P 500 Source: Bloomberg as at 18 October 2013 5

  6. Slide 6: Parent Company Performance Comparison – Europe

    Parent Company Performance Comparison Europe – 5 Year TSR 1,450 269.8% 231.9% 1,250 230.7% Share Price (p) (rebased to WPP) 1,050 850 650 54.6% 24.3% 450 250 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 WPP Publicis Havas FTSE 100 CAC 40 Source: Bloomberg as at 18 Oct

  7. Slide 7: Revenue by Discipline: Third Quarter

    Third Quarter 2013 Revenue by Discipline: Third Quarter % Change 2013 2012 Reported Constant Like-for- £m £m Currency like Advertising, Media Investment 1,087 999 8.8 8.2 6.6 Management Data Investment Management 617 591 4.4 3.2 3.6 Public Relations & Public Affairs 229 227 0.7 -0.6 -0.9 Branding &

  8. Slide 8: Revenue by Discipline: Year to Date

    Third Quarter 2013 Revenue by Discipline: Year to Date % Change 2013 2012 Reported Constant Like-for- £m £m Currency like Advertising, Media Investment 3,279 3,043 7.7 6.5 5.1 Management Data Investment Management 1,855 1,783 4.1 2.6 1.8 Public Relations & Public Affairs 687 686 0.1 -1.7 -2.7 Brandi

  9. Slide 9: Advertising, Media Investment Management

    Third Quarter 2013 Advertising, Media Investment Management  Strongest performing sector as in 2012 and first half of 2013. Growth in quarter three was the strongest quarterly growth so far this year in both advertising and media investment management.  Advertising improved in third quarter, parti

  10. Slide 10: Data Investment Management

    Third Quarter 2013 Data Investment Management  Like-for-like growth in third quarter accelerated from quarter two, with particularly strong growth in North America, Africa and the Middle East, with the United Kingdom and Ireland weaker.  Millward Brown, Kantar Media, Kantar Worldpanel, Kantar Reta

  11. Slide 11: Public Relations & Public Affairs

    Third Quarter 2013 Public Relations & Public Affairs  Weak third quarter, with like-for-like revenues down 0.9% but less worse than the first half.  Geographically, positive growth in Asia Pacific and Africa.  Forecast like-for-like growth for quarter four. 11

  12. Slide 12: Branding & Identity, Healthcare and Specialist Communications

    Third Quarter 2013 Branding & Identity, Healthcare and Specialist Communications  Like-for-like growth of 5.7% in third quarter, stronger than the second quarter driven by direct, digital and interactive, branding and identity and healthcare communications.  Geographically, strong like-for-like gr

  13. Slide 13: Direct, Digital and Interactive

    Third Quarter 2013 Direct, Digital and Interactive  In the first nine months almost 35% of Group revenues came from direct, digital and interactive, up nearly 300 basis points from the previous year.  Direct, digital and interactive revenues up over 8% like-for-like in the first nine months.  Acq

  14. Slide 14: Xaxis Ad Serving accelerates

    Third Quarter 2013 Xaxis Ad Serving accelerates Evidon Ad Delivery Index Sept 2013 Rank Impressions (bn) 1 Double-Click (Google) 230.0 2 OpenX 84.4 3 AppNexus 73.7 No other 4 Google Adsense 59.2 direct 5 Rubicon 46.2 competitor 6 Advertising.com 45.4 present 7 Right Media 43.9 8 MediaMind 41.5 9 Yie

  15. Slide 15: Revenue by Region: Third Quarter

    Third Quarter 2013 Revenue by Region: Third Quarter % Change 2013 2012 Reported Constant Like-for- £m £m Currency like North America 948 885 7.2 5.5 4.6 UK 352 311 13.2 13.2 8.1 Western Continental Europe 589 537 9.6 2.7 2.6 Asia Pacific, Latin America, Africa & Middle East, Central & Eastern 791 76

  16. Slide 16: Revenue by Region: Year to Date

    Third Quarter 2013 Revenue by Region: Year to Date % Change 2013 2012 Reported Constant Like-for- £m £m Currency like North America 2,788 2,633 5.9 3.8 2.0 UK 1,021 902 13.1 13.1 5.8 Western Continental Europe 1,847 1,724 7.2 2.4 0.1 Asia Pacific, Latin America, Africa & Middle East, Central & Easte

  17. Slide 17: Growth by Region

    Third Quarter 2013 Growth by Region  Faster growing markets of Asia Pacific, Latin America, Africa & the Middle East continued the strong growth seen in the first half with like- for-like growth of 5.8%. The United Kingdom grew even more strongly in the third quarter with like-for-like growth of 8.

  18. Slide 18: Revenue Growth by Country

    Third Quarter 2013 Revenue Growth by Country Revenue Growth¹ Countries >20% Argentina 10% to 20% Thailand Brazil, Germany, India, Italy, Mainland China², Netherlands, 5% to 10% Poland, Russia, South Africa, Sweden, UK Australia, Belgium, Canada, Denmark, France, Greater Below 5% China³, Japan, Mexic

  19. Slide 19: Revenue Growth by Category

    Third Quarter 2013 Revenue Growth by Category Revenue Growth¹ Categories Above 10% Entertainment, Travel & Airline 5% to 10% Automotive, Oil, Personal Care & Drugs Computers, Drinks, Electronics, Financial Services, Below 5% Food, Government, Retail, Telecommunications 1 Like-for-like growth 19

  20. Slide 20: Effects of Currency

    Third Quarter 2013 Effects of Currency  Currency movements accounted for a 1.0% increase in revenue, largely reflecting the weakness of the £ sterling against the euro and the US$, partly offset by strength against most faster growing market currencies.  Sterling weaker overall as follows: Q3 2013

  21. Slide 21: Trade Estimates of Major New Business Wins (1)

    Third Quarter 2013 Trade Estimates of Major New Business Wins (1) WPP Agency Incumbent Account Office Billings($m) Grey OMC Procter & Gamble (Gillette) Global 800 GroupM PUB Nestlé USA 750 GroupM PUB/DEN GSK Global 600 MediaCom OMC Sony Global 500 Y&R PUB/IND JCPenney USA 440 Team Plus MEC Chanel Gl

  22. Slide 22: Trade Estimates of Major New Business Wins (2)

    Third Quarter 2013 Trade Estimates of Major New Business Wins (2) WPP Agency Incumbent Account Office Billings($m) JWT IND Nokia Global 120 Mindshare OMC/HAV BBVA Global 115 Grey OMC/Y&R Allianz Global 100 Ogilvy PUB Weight Watchers USA 95 JWT/ Mindshare IND Air Canada Global 80 MEC IPG LegalZoom US

  23. Slide 23: Trade Estimates of Major New Business Losses

    Third Quarter 2013 Trade Estimates of Major New Business Losses WPP Agency Winning Agency Account Office Billings($m) Mindshare PUB AbbVie Global 365 Mindshare IPG Amazon Global 220 MEC Team Plus Chanel Global 200 Mindshare HAV LG Global 160 Mindshare PUB Motorola Global 150 JWT MDC Diageo Global 50

  24. Slide 24: Internal Estimates of Net New Business Wins – Year to Date

    Third Quarter 2013 Internal Estimates of Net New Business Wins – Year to Date ($m) Creative Media Total Advertising 3,136 3,976 7,112 Other Businesses 784 - 784 Third Quarter YTD 2013 3,920 3,976 7,896 Third Quarter YTD 2012 2,047 3,328 5,375 24

  25. Slide 25: Trade Estimates of Major New Business Wins/Losses Since October

    Third Quarter 2013 Trade Estimates of Major New Business Wins/Losses Since 1 October WPP Agency Incumbent Account Office Billings($m) Mindshare PUB L’Oreal - Digital China 100 Grey OMC Hasbro USA 96 JWT DEN Canon EMEA 80 MediaCom MDC ADT USA 57 WINS Ogilvy United Comcast USA 50 Wunderman N/A Shell G

  26. Slide 26: Cash Flow and Net Debt

    Third Quarter 2013 Cash Flow and Net Debt  Average net debt in the first nine months down £61 million to £3.080 billion, compared to £3.141 billion in 2012, at 2013 exchange rates.  Acquisitions and investments (including earnouts) and share repurchases totalled £320 million in nine months to 30 S

  27. Slide 27: Acquisitions and Investments – Year to Date

    Third Quarter 2013 Acquisitions and Investments – Year to Date Faster Growing Quantitative & Markets Digital BENENSON (USA) BRANDANALYTICS (BRAZIL) Netbooster (Indonesia/Philippines) CANDYSPACE (UK)² BRANDIGITAL (LATIN AMERICA) PENNYWISE (INDIA) COLMAR BRUNTON (NZEALAND)¹ BPG PR (MENA)³ CBC II (Chin

  28. Slide 28: Other Acquisitions – Year to Date

    Third Quarter 2013 Other Acquisitions – Year to Date Advertising john st. (Canada) Public Relations & Public Affairs AxiCom (Europe)¹ 1 Step-ups in investments, associates and subsidiaries’ equity 28

  29. Slide 29: Uses of Free Cash Flow

    Third Quarter 2013 Uses of Free Cash Flow Category Target Sept YTD 2013 Sept YTD 2012 FY 2012 Acquisitions¹ £300-£400m £186m² £487m² £500m² Share purchases 1%-2% 1.0% 0.7% 1.3% Dividend increase n/a 20% 18% 16% Dividend pay-out ratio (2 years) 45% n/a n/a 39% 1 Includes investments and step-ups in s

  30. Slide 30: Summary

    Third Quarter 2013 Summary  Acceleration in Q3 like-for-like growth to 5.0%, with growth in all regions and sectors except public relations and public affairs.  What was lost on the “faster growth market swings” was more than offset by growth on the “mature market roundabouts”.  Data investment m

  31. Slide 31: Outlook

    Third Quarter 2013 Outlook  Q3 revised forecasts indicate growth above 3% with second half US recovery and overall growth in Europe, with faster growth markets continuing their strong contribution to growth.  Continued growth in data investment management and return to like-for- like growth for pu

  32. Slide 32: Organic Growth and GDP

    Third Quarter 2013 Organic Growth and GDP 9.0 WPP Organic 8.0 GDP Nominal / Goldman Sachs GDP Nominal / Business Council (2014 Only) 7.0 6.0 5.0 Growth (%) 4.0 3.0 2.0 1.0 0.0 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 FY/14 32

  33. Slide 33: Conclusion

    Third Quarter 2013 Conclusion  The Group is well placed as we close the year and begin preparations for 2014: – variable costs in the 6% to 7% range – headcount held at close to 2012 level through the year – good new business momentum – strong cash flow and improving balance sheet ratios  There ar

  34. Slide 34: Trading Statement for the Third Quarter 2013

    Trading Statement for the Third Quarter 2013 October 2013 34

  35. Slide 35: Share Price Performance Since POG Announcement – North America

    Share Price Performance Since POG Announcement 105 North America 14.5% Share Price ($) (rebased to WPP) 100 95 3.1% 1.1% 0.8% 90 85 80 26-Jul 07-Aug 19-Aug 31-Aug 12-Sep 24-Sep 06-Oct 18-Oct WPP ADR Omnicom Interpublic S&P 500 Source: Bloomberg as at 18 October 2013 35

  36. Slide 36: Share Price Performance Since POG Announcement – Europe

    Share Price Performance Since POG Announcement 1,400 Europe 15.6% 1,350 Share Price (p) (rebased to WPP) 1,300 9.4% 8.0% 1,250 1,200 1.0% 0.3% 1,150 1,100 1,050 26-Jul 07-Aug 19-Aug 31-Aug 12-Sep 24-Sep 06-Oct 18-Oct WPP Publicis Havas FTSE 100 CAC 40 Source: Bloomberg as at 18 October 2013 36

  37. Slide 37: Year-to-Date Share Price Performance – North America

    Year-to-Date Share Price Performance North America 120 115 Share Price ($) (rebased to WPP) 110 45.6% 105 42.6% 100 31.4% 95 90 22.3% 85 80 75 70 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 WPP ADR Omnicom Interpublic S&P 500 Source: Bloomberg as at 18 October 2013 37

  38. Slide 38: Year-to-Date Share Price Performance – Europe

    Year-to-Date Share Price Performance Europe 1,350 49.9% 1,300 44.8% Share Price (p) (rebased to WPP) 1,250 1,200 31.6% 1,150 1,100 1,050 17.7% 1,000 12.3% 950 900 850 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 WPP Publicis Havas FTSE 100 CAC 40 Source: Bloomberg as at 18 O

  39. Slide 39: Parent Company Performance Comparison – North America Year TSR

    Parent Company Performance Comparison North America – 1 Year TSR 110 52.1% 100 44.5% Share Price (p) (rebased to WPP) 90 32.2% 19.7% 80 70 60 50 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 WPP ADR Omnicom Interpublic S&P 500 Source: Bloomberg as at 18 O

  40. Slide 40: Parent Company Performance Comparison – Europe Year TSR

    Parent Company Performance Comparison Europe – 1 Year TSR 1,350 53.3% 51.3% 1,250 Share Price (p) (rebased to WPP) 39.5% 1,150 1,050 21.2% 950 11.9% 850 750 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 WPP Publicis Havas FTSE 100 CAC 40 Source: Bloomberg

  41. Slide 41: Parent Company Performance Comparison – North America Year TSR

    Parent Company Performance Comparison North America – 10 Year TSR 120 117.8% 100 Share Price ($) (rebased to WPP) 74.8% 80 67.0% 60 15.5% 40 20 0 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 WPP ADR Omnicom Interpublic S&P 500 Source: Bloomberg as at 18 October 2013 4

  42. Slide 42: Parent Company Performance Comparison – Europe Year TSR

    Parent Company Performance Comparison Europe – 10 Year TSR 1,400 126.3% 126.2% 1,200 Share Price (p) (rebased to WPP) 1,000 59.6% 52.3% 800 27.6% 600 400 200 0 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 WPP Publicis Havas FTSE 100 CAC 40 Source: Bloomberg as at 18 O

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