WPP has delivered resilient performance in 2023 with 0.9% growth: Mark Read

WPP has reported resilient performance in 2023 with 0.9% like-for-like growth and improved headline margin which was up 0.2pt like-for-like. Investing in AI and innovation is expected to deliver improved growth, margin and cash.

Full year and Q4 financial highlights:

FY reported revenue +2.9%, LFL revenue +3.2%
FY revenue less pass-through costs +0.5%, LFL revenue less pass-through costs +0.9%
Q4 LFL revenue less pass-through costs +0.3% with ex-US +3.1% benefiting from strong growth in the UK and India, partially offset by declines in Germany and China. US Q4 LFL decline of 4.5% primarily due to lower spend by technology, healthcare and retail clients, partially offset by growth in CPG, telecoms and automotive sectors
Global Integrated Agencies FY LFL revenue less pass-through costs +1.3% (Q4: +0.7%): within which GroupM grew +4.9% (Q4: +5.7%), partially offset by a 1.6% decline in other Global Integrated Agencies (Q4: -3.4%)
Solid new business performance: $4.5bn net new billings (2022: $5.9bn) with Q4 net new billings $1.1bn (Q4 2022: $0.8bn). The current pipeline of potential new business remains higher year-on-year
FY headline operating profit margin in line with original guidance of 15.0% (excluding the impact of FX). Headline operating profit margin of 14.8% (2022: 14.8%) reflecting a 0.2pt drag from FX, disciplined cost control and continued investment in our technology, data and AI offer
Reported EPS of 10.1p (2022: 61.2p) reflects the impact of accelerated amortisation of intangible assets as a result of the creation of VML, and property impairments announced earlier in the year
Headline EPS of 93.8p (2022: 98.5p) reflects a zero contribution from Kantar in income from associates in 2023, which in 2022 represented 3.3p in headline EPS
Adjusted operating cash flow of £1,280m (2022: £669m) reflecting an improved working capital performance
Adjusted net debt at 31 December 2023 £2.5bn, flat year-on-year
Final dividend of 24.4p proposed (2022: 24.4p) resulting in a proposed total dividend of 39.4p (2022: 39.4p) in line with our payout policy of approximately 40% of headline diluted EPS

Strategic progress and 2024 guidance:

VML launched in January following the merger of VMLY&R and Wunderman Thompson with senior leadership appointed. GroupM simplification plan on track. Burson, created from the merger of Hill & Knowlton and BCW, scheduled to launch in July
Acquisitions in the year included influencer marketing agencies Goat and Obviously and are contributing well to growth
2020 transformation programme gross annual savings of £475m in 2023 against a 2019 base, ahead of planned £450m, with savings from our campus programme, procurement initiatives, simpler WPP and lower travel costs
2024 guidance: LFL revenue less pass-through costs growth of 0-1%, with improvement in headline operating profit margin of 20-40bps (excluding the impact of FX)

AI will be fundamental for our business: Mark Read

Commenting on the results, Mark Read, Chief Executive Officer, WPP, said, “While 2023 was more challenging than we expected due to cuts in spending by technology clients, we delivered a resilient performance for the year with 0.9% like-for-like growth and a 0.2 point improvement in our headline operating margin at constant currency. This was driven by disciplined cost control, while continuing to invest in AI, data and technology.”

He further said, “Our net new business of $4.5 billion in 2023 included major new assignments with clients such as Allianz, Krispy Kreme, Mondelēz, Nestlé, PayPal and Verizon and reflects a stronger year-on-year performance in the fourth quarter.”

On the group’s push for AI, Read said, “At our recent Capital Markets Day, we detailed our strategy to capture the opportunities of AI, data and technology, while harnessing the full power of our offer to clients, building world-class agency brands, and driving strong financial returns through efficient execution.”

“AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients. Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients,” he added.

Read was confident about delivering accelerated and increasingly profitable growth over the medium term.