WPP is entering 2023 in a strong financial position: Mark Read

All key WPP agencies saw strong performance driven by growth in 2022. In a statement issued, Mark Read, Chief Executive Officer, WPP, said, “WPP delivered strong growth in 2022, despite the macro challenges, reflecting the priority placed by our clients on investing in communications, customer experience, commerce, data and technology. The competitiveness of our offer drove net new business of $5.9 billion in 2022, including new assignments with Audible, SC Johnson, and Verizon among many others and the quality of our work was recognised at the Cannes Lions Festival of Creativity, where WPP was named Creative Company of the Year.”

Full year and Q4 financial highlights:

• FY reported revenue +12.7%, LFL revenue +6.7%
• FY LFL revenue less pass-through costs +6.9%; with good performance in Q4 +6.4%
• Q4 LFL revenue less pass-through costs by major market: US +3.5%, UK +12.0%, Germany +4.9%, China -8.4%, India +8.5%
• Three-year FY LFL revenue less pass-through costs +10.0%; Q4 +10.2%
• FY headline operating margin 14.8%, up 0.4 points LFL with strong top-line growth and efficiency savings supporting investment and margin expansion
• Reported diluted EPS 61.2 pence; headline diluted EPS up 25.5% to 98.5 pence
• Adjusted net debt at December 31, 2022, £2.5 billion (2021: £0.9 billion) after investments and over £1.1 billion of cash returned to shareholders. Average adjusted net debt to EBITDA ratio of 1.46x, slightly below the 1.5-1.75 target range
• Trade working capital adverse movement of £226 million[iv]at year-end driven by mix and timing factors. Average trade working capital across 2022 was flat year-on-year
• Final dividend of 24.4 pence proposed, up 30.5%, for a proposed total dividend for 2022 of 39.4 pence, in line with our policy of approximately 40% of headline diluted EPS

Adding further, Read said, “Our transformation is now delivering measurable results. Over the past three years, WPP has grown like-for-like net sales at a compound average rate of 3.2%, including 3.3% in North America, while improving our headline operating profit margin by 40 basis points. Our adjusted net debt has declined from over £4 billion at the end of 2018 to £2.5 billion, while over £3.4 billion has been returned to shareholders via share buybacks and dividends.”

Strategic progress:

• Strong performance across major WPP agencies: Continued strength in GroupM 2022 with FY LFL revenue less pass-through costs growth of +9.1%, with other Global Integrated Agencies delivering 5.0% LFL growth; Public Relations 8.2% and Specialist Agencies 5.6%.
• Transformation programme gross annual savings of around £375 million against a 2019 base are ahead of the planned £300 million, with savings in property, procurement and ways of working, enabling additional investment in talent for growth areas. On track to reach target of £600 million by 2025.
• Recognised for creativity: Most awarded company at the 2022 Cannes Lions Festival for the second year running.

“We enter 2023 in a strong financial position with good momentum from new business and the many opportunities ahead of us. While there will no doubt be challenges, the continued need for major companies to build brands, sell products, reinvent and transform their business, understand their data, invest in technology and exploit the potential of AI remains, as does their need for modern partners who can help them navigate this new world.”