WPP H1 2022 revenue up 10.2% at £6,755 mn; operating profit up 11.4%

WPP has reported a strong first half in 2022, led by broad-based growth and sustained demand from clients, even as its transformation programme is on track. Its 2022 growth guidance has been upgraded again.

H1 and Q2 financial highlights:

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• Client demand strong across most segments and regions
• H1 reported revenue up 10.2%, LFL revenue 8.7% (Q2 9.3%)
• H1 revenue less pass-through costs up 12.5%, LFL revenue less pass-through costs up 8.9% (up 9.4% on H1 2019)
• Q2 LFL revenue less pass-through costs up 8.3%: US 10.4%, UK 6.2%, Germany 11.5%, China (6.1)% (affected by lockdowns), Australia 3.2%
• Strong new business performance: $3.4 billion net new billings in H1
• H1 headline operating profit margin 11.6%, down 0.5pt on prior year as expected, as a result of higher personnel costs and a return to business travel
• Trade working capital cash outflow £232 million year-on-year; still expected to be around flat year-on-year at year-end
• Adjusted net debt at June 30, 2022 £3.1 billion, up £1.6 billion year-on-year after £1.1 billion of share buybacks since June 2021

Strategic progress, shareholder returns and outlook

• Continued recognition of extraordinary creativity: WPP awarded most creative company at Cannes Lions for second year running
• Faster growth areas of experience, commerce and technology around 39% of revenue less pass-through costs in Global Integrated Agencies ex-GroupM in H1
• Strong performance by industry sector: H1 LFL revenue less pass-through costs growth 12% in Technology, 7% in CPG and 7% in Healthcare
• Investing for growth: enhancing our data capabilities through Choreograph and launch of Everymile, direct-to-consumer ecommerce offer
• Focused M&A: acquisition of Village Marketing to accelerate creator economy growth and Bower House Digital, a leading marketing technology agency
• Further simplification to enhance offer to clients: creation of Essence Mediacom and Design Bridge and Partners
• Transformation programme on track to deliver expected £300 million of annual savings this year over a 2019 base
• £637 million share buybacks in H1, total of £800 million to be completed in 2022; 15.0p 2022 interim dividend declared, +20%
• Full year 2022 LFL revenue less pass-through costs growth now expected to be 6.0-7.0%; headline operating profit margin up around 50 bps

Commenting on WPP’s performance in H1 2022, CEO Mark Read said, “We have enjoyed a strong first half, with broad-based growth across our creative, media and public relations businesses. This reflects the improved competitive position of our creative businesses, with their growing capabilities in commerce, experience and technology, our continued strength in media and the resurgence in demand for strategic communications advice from our public relations agencies.”

He further said, “Our services are business-critical – driving growth, building brands, innovating and helping clients navigate an increasingly complex marketing environment. As major advertisers increasingly look to integrate their marketing investments, we are well positioned to serve the world’s largest companies, demonstrated by our success with Coca-Cola, which we are now onboarding at pace. The second quarter saw significant assignment wins from Audi, Audible, Danone and Nationwide.’

“Our clients are continuing to invest in WPP’s services, which reflects our attractive industry exposure in technology and healthcare, our broad global footprint, and the importance of what we do for their businesses. The actions we have taken over the last four years leave WPP much better positioned with a more uncertain economic environment ahead,” Read added.