Wpp Plc · LSE:WPP
Wpp — Investor Presentation (June 2024)
37 slides from Wpp's investor presentation, Jun 5, 2024
Slide 1: Investor Overview Presentation
INVESTOR OVERVIEW PRESENTATION UPDATED AS OF 5 JUNE 2024 1
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This document contains statements that are, or may be are not limited to: the impact of epidemics or pandemics Company’s major markets (which varies depending on, deemed to be, “forward-looking statements”. Forward- including restrictions on
Slide 3: WPP Today
WPP TODAY 3
Slide 4: WPP Is the Creative Transformation Company
WPP IS THE CREATIVE TRANSFORMATION COMPANY We provide marketing communications services that help brands grow and transform their businesses Our work spans the full marketing spectrum, from advertising campaigns, social media management and influencer marketing to commerce solutions, app development
Slide 5: Six World Class Brands, Approaching 90% Net Sales
SIX WORLD CLASS BRANDS, APPROACHING 90% NET SALES GLOBAL INTEGRATED AGENCIES PR CREATIVE MEDIA #1 Leading Leading #1 #1 Top 2 creative agency, global production spanning brand, CX global creative ideas and innovation agency global media global PR firm agency company agency and commerce 30k 15k 5.5k
Slide 6: Unrivalled Global Reach and Scale
UNRIVALLED GLOBAL REACH AND SCALE % WPP People % WPP People % WPP People % WPP People North Western Central & 38% 23k UK 14% 12k 20% 23k 2% 4k America Continental Europe Eastern Europe 36% 21k 7% 7k 2% 2k 2% 2k 2% 2k % WPP People % WPP People % WPP People Africa & Asia LATAM 6% 15k 3% 5k 16% 31k Mid
Slide 7: Global Leadership in Media
GLOBAL LEADERSHIP IN MEDIA GROUPM MARKET POSITION EMEA #1 30% Market Share 1 1 North America #2 1 1 $63.5bn 2 3 1 Global Billings 2 #1 Agency group in 47% of LATAM1 #2 APAC #1 measured markets 1 2 77% Of global markets where 1 2 GroupM is 1st or 2nd 1. LATAM ranking includes COMvergence FY22 figures
Slide 8: Critical Long-Term Partner to World's Largest Companies
CRITICAL LONG-TERM PARTNER TO WORLD’S LARGEST COMPANIES MULTI-DECADE GLOBAL RELATIONSHIPS DIVERSE CLIENT SECTOR MIX TOP 10 CLIENTS RELATIONSHIP # MARKETS # AGENCIES LFL REVENUE LESS PASS-THROUGH COSTS 2023 2011 14 8 1963 35 8 3% 4% 5% 1984 43 11 Telecom, media & 6% 27% CPG entertainment 1997 20 9 Fi
Slide 9: Led by a World Class Leadership Team
LED BY A WORLD CLASS LEADERSHIP TEAM Mark Read Joanne Wilson Andrew Scott CEO CFO COO Years at WPP: 27 Years at WPP: 9m Years at WPP: 25 Ajaz Ahmed Devika Jon Cook AnnaMaria DeSalva Corey duBrowa CEO, AKQA Bulchandani Global CEO, VML Global Chairman, Global CEO, Years at WPP: 12 Global CEO, Ogilvy Y
Slide 10: Evolution Since 2018
EVOLUTION SINCE 2018 10
Slide 11: Our Structure Is Now Radically Simpler
OUR STRUCTURE IS NOW RADICALLY SIMPLER REVENUE LESS PASS-THROUGH COSTS £12.8bn1 £9.8bn £11.9bn2 GroupM other GroupM other 2018 2020 TODAY 1. Includes Kantar, total excluding Kantar = £10.9B 11 2. Provisional figure
Slide 12: Growth, Margin and Free Cash Flows Have Stabilised
GROWTH, MARGIN AND FREE CASH FLOWS HAVE STABILISED LFL REVENUE LESS PASS- HEADLINE OPERATING FREE CASH FLOW2 (£BN) THROUGH COSTS GROWTH1 (%) MARGIN1 (%) 1.3 1.3 12.1 1.1 15.3 1.0 14.4 14.4 14.8 14.8 6.9 12.9 0.9 0.6 (0.2) (1.6) 0.1 (8.2) 3 3 3 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2
Slide 13: And We Enter the Third Phase of Our Strategy
AND WE ENTER THE THIRD PHASE OF OUR STRATEGY STABILISATION ACCELERATING GROWTH INNOVATING TO LEAD 2018-2020 2020-2023 2024+ • Set out new vision, values and • Expanded major client 1. Lead through AI, data and culture relationships with strong growth technology • Rebuilt client relationships • Stren
Slide 14: Innovating to Lead
INNOVATING TO LEAD 14
Slide 15: Innovating to Lead, Today and Tomorrow
INNOVATING TO LEAD, TODAY AND TOMORROW 1 LEAD THROUGH AI, DATA & TECHNOLOGY 2 ACCELERATE GROWTH THROUGH THE POWER OF CREATIVE TRANSFORMATION 3 BUILD WORLD-CLASS, MARKET-LEADING BRANDS 4 EXECUTE EFFICIENTLY TO DRIVE FINANCIAL RETURNS THROUGH MARGIN AND CASH 15
Slide 16: Innovating to Lead, Today and Tomorrow
INNOVATING TO LEAD, TODAY AND TOMORROW 1 LEAD THROUGH AI, DATA & TECHNOLOGY 2 ACCELERATE GROWTH THROUGH THE POWER OF CREATIVE TRANSFORMATION 3 BUILD WORLD-CLASS, MARKET-LEADING BRANDS 4 EXECUTE EFFICIENTLY TO DRIVE FINANCIAL RETURNS THROUGH MARGIN AND CASH 16
Slide 17: Leading Through AI, Data and Technology
1 LEADING THROUGH AI, DATA AND TECHNOLOGY OUR APPROACH OUR COMPETITIVE ASSETS Reinventing our business, DEEP TECHNICAL CAPABILITIES commercial and operating models Reinvention DOMAIN EXPERTISE & DATA Embedding AI into Acceleration existing products WPP OPEN and services CO-ORDINATED INVESTMENT AI em
Slide 18: Supporting Our Accelerated Growth and Efficiency
1 SUPPORTING OUR ACCELERATED GROWTH AND EFFICIENCY AI-powered technology • New opportunities for technology licence fees, particularly in commerce, solutions through WPP Open production, media • Consulting projects to enable clients to use AI AI services and consulting • Technology projects with AI
Slide 19: Scaling AI Through WPP Open
1 SCALING AI THROUGH WPP OPEN Creative Production Media Commerce Experience PR 3rd Party Studio Studio Studio Studio Studio Studio Apps H&K Miro Adobe … WPP Workspace Google Workspace Nestle Workspace TCCC Workspace ... Nestlé Nestlé Nestlé Nestlé AI Brand Brain Audience Brain Channel Brain Performa
Slide 20: Access to the World's Data for Clients
1 ACCESS TO THE WORLD’S DATA FOR CLIENTS WPP OWNED DATA 800m geographic cohorts globally, indexed against 20m points of interest 34 petabytes of campaign data 16bn+ data points on 63,000 brands 300m profiles in US, with 10,000 unique attributes CONTEXTUAL DATA 30m unique geographic cohorts with over
Slide 21: Innovating to Lead, Today and Tomorrow
INNOVATING TO LEAD, TODAY AND TOMORROW 1 LEAD THROUGH AI, DATA & TECHNOLOGY 2 ACCELERATE GROWTH THROUGH THE POWER OF CREATIVE TRANSFORMATION 3 BUILD WORLD-CLASS, MARKET-LEADING BRANDS 4 EXECUTE EFFICIENTLY TO DRIVE FINANCIAL RETURNS THROUGH MARGIN AND CASH 21
Slide 22: Creative Transformation Helps Clients Manage Complexity
2 CREATIVE TRANSFORMATION HELPS CLIENTS MANAGE COMPLEXITY A FAST CHANGING WORLD ACCELERATING AI SOCIAL AND CONVERGENCE OF EXPLODING DATA IMPACT INFLUENCER FIRST CULTURE & LANDSCAPE MARKETING ENTERTAINMENT CHANNEL GROWING POLARISED PROLIFERATION GEOPOLITICAL CONSUMERS COMPLEXITY 22
Slide 23: Media Ecosystem Fragmented but Ad Revenue Consolidated into Global Platforms
2 MEDIA ECOSYSTEM FRAGMENTED BUT AD REVENUE CONSOLIDATED INTO GLOBAL PLATFORMS Meituan Pinduoduo 0.79% share Microsoft Walmart 2.8% 2.5% Comcast 0.74% share Amazon share Snap 0.72% JC Decaux 0.42% share 1.2% Paramount $123.7B share share share 1.0% Pinterest 0.42% Alibaba share RTL revenue X share 0
Slide 24: Breadth of Services Driving Growth in Top Clients
2 BREADTH OF SERVICES DRIVING GROWTH IN TOP CLIENTS TOP 10 CLIENTS GREW 6.6% VS. 2.6% CAGR OVERALL (2019-2023)1 GLOBAL INTEGRATED AGENCIES PR CREATIVE MEDIA PR COMMUNICATIONS EXPERIENCE COMMERCE PRODUCTION BRAND MEDIA PRERFORMANCE RETAIL MEDIA PR MEDIA Scale of engagement Significant Some No current
Slide 25: Innovating to Lead, Today and Tomorrow
INNOVATING TO LEAD, TODAY AND TOMORROW 1 LEAD THROUGH AI, DATA & TECHNOLOGY 2 ACCELERATE GROWTH THROUGH THE POWER OF CREATIVE TRANSFORMATION 3 BUILD WORLD-CLASS, MARKET-LEADING BRANDS 4 EXECUTE EFFICIENTLY TO DRIVE FINANCIAL RETURNS THROUGH MARGIN AND CASH 25
Slide 26: These World Class Brands Strengthen Our Offer
3 THESE WORLD CLASS BRANDS STRENGTHEN OUR OFFER During 2024, WPP is undertaking three strategic initiatives to create a simpler, more effective offer for clients: • Creation of new powerhouse • Synergy 2.0 transformation • Creation of Burson, through the agency, VML, through the merger programme at
Slide 27: Market-Leading Brands Driving Improved Performance
3 MARKET-LEADING BRANDS DRIVING IMPROVED PERFORMANCE • Faster growth • Greater simplicity • Increased scale • More agility • Improved profitability 27
Slide 28: Innovating to Lead, Today and Tomorrow
INNOVATING TO LEAD, TODAY AND TOMORROW 1 LEAD THROUGH AI, DATA & TECHNOLOGY 2 ACCELERATE GROWTH THROUGH THE POWER OF CREATIVE TRANSFORMATION 3 BUILD WORLD-CLASS, MARKET-LEADING BRANDS 4 EXECUTE EFFICIENTLY TO DRIVE FINANCIAL RETURNS THROUGH MARGIN AND CASH 28
Slide 29: At Our 2024 CMD We Set Out Medium Term Targets
4 AT OUR 2024 CMD WE SET OUT MEDIUM TERM TARGETS 3%+ 16%-17% 85%+ 1.5-1.75x Organic growth Headline Adjusted Operating Cash Average Net Debt / Revenue less pass- Operating Margin Flow Conversion Headline EBITDA1 through costs DISCIPLINED CAPITAL ALLOCATION Potential for M&A to accelerate growth by u
Slide 30: Accelerating Growth to 3%+ in Medium Term
4 ACCELERATING GROWTH TO 3%+ IN MEDIUM TERM GLOBAL INTEGRATED AGENCIES PR SPECIALIST CREATIVE MEDIA 45% 38% 0.5% 2%+ 5.3% 5%+ 83% 10% 7% 2.6% 3%+ 4.0% 4%+ 1.9% 2%+ 3%+ Medium-term growth 4Y CAGR: 2019-20231 Medium term LFL growth in revenue less pass-through costs 1. Based on 2023 provisional view 3
Slide 31: Balancing Margin Progression and Investment
4 BALANCING MARGIN PROGRESSION AND INVESTMENT INVESTMENT IN CLIENT- SIDE INVESTMENT TECHNOLOGY IN TALENT OPERATING LEVERAGE EFFICIENCY SAVINGS GUIDANCE STRUCTURAL +20-40bps SAVINGS 16% to 15.0% 17%1 to 14.8% 15.2%1 FY23 FY24 Medium term 1. At constant FX 31
Slide 32: Three Levers to Unlock More Profitable Growth
4 THREE LEVERS TO UNLOCK MORE PROFITABLE GROWTH 1) STRUCTURAL 2) EFFICIENCY 3) OPERATING SAVINGS SAVINGS LEVERAGE Back office efficiencies Margins scaling with top line growth Commercial delivery 32
Slide 33: Driving Strong Cash Generation
4 DRIVING STRONG CASH GENERATION CASH RESTRUCTURING COSTS c. £285m c. £205m < £30m 2023 2024 2025 2026 2027 Campus programme Property IT & Other VML, GroupM & Burson ERP 33
Slide 34: Disciplined Capital Allocation
4 DISCIPLINED CAPITAL ALLOCATION RETURN OF ORGANIC DIVIDEND M&A EXCESS INVESTMENT CAPITAL Disciplined P&L Progressive Disciplined approach Excess capital and balance sheet dividend with to M&A returned via investment in around 40% buybacks or technology and AI payout of headline special dividends an
Slide 35: Investment Case
INVESTMENT CASE 35
Slide 36: WPP | The Investment Case
WPP | THE INVESTMENT CASE • Unrivalled global reach and scale • Attractive and growing addressable markets Accelerated • Deep client relationships with leading growth, margin businesses expansion and improved cash • Leading through AI, data and technology generation to drive • Financial strength wit
Slide 37: Contacts and Further Resources
CONTACTS AND FURTHER RESOURCES TOM WALDRON INVESTOR WEBSITE Group Investor Relations Director wpp.com/investors [email protected] Tel: +44 (0) 7788 695 864 CAPITAL MARKETS DAY 2024 Materials linked here ANTHONY HAMILTON Investor Relations Director INVESTOR WEBINARS [email protected] A serie