WPP Reports 8.3% revenue in First Quarter Trading
Quarter 1 highlights
Revenue growth of 8.3%, with constant currency growth of 7.4%, like-for-like growth of 5.2%, 2.2% growth from acquisitions and 0.9% from currency, reflecting the weakness of sterling against the US dollar, partly offset by the strength of sterling, primarily against the euro.
Net sales growth of 6.0% in sterling (down 3.2% in dollars and up 18.3% in euros), with constant currency growth of 5.0%, like-for-like growth of 2.5%, 2.5% growth from acquisitions and 1.0% from currency
Like-for-like revenue growth in all regions and business sectors, except data investment management, characterised by particularly strong growth geographically in the United Kingdom and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, and functionally in advertising and media investment management and sub-sectors direct, digital and interactive and healthcare
Like-for-like net sales growth of 2.5%, with all regions and sectors, including data investment management, showing growth. The gap compared to revenue growth is similar to the first quarter of 2014, reflecting the scale of digital media purchases in the media investment management and data investment management direct costs
Constant currency average net debt in the first quarter increased by £185m (7%) to £2.734 billion compared to the same period in 2014, continuing to reflect the significant incremental net acquisition spend and share re-purchases of £331 million in the twelve months to 31 March 2015, compared with the previous twelve months, more than offsetting the improvements in working capital seen in the second half and final quarter of last year
Net new business of almost exactly $1.0 billion in the first quarter, compared to $1.275 billion in the first quarter last year.
Current trading and outlook
FY 2015 quarter 1 preliminary revised forecasts | Similar to budget, with like-for-like revenue and net sales growth up over 3%. Headline net sales margin target of 0.3 margin points improvement on a constant currency basis
Dual focus in 2015 | 1. Stronger than competitor revenue and net sales growth due to leading position in faster growing geographic markets and digital, premier parent company creative and effectiveness position, new business, horizontality and strategically targeted acquisitions; 2. Continued emphasis on balancing revenue and net sales growth with headcount increases and improvement in staff costs/net sales ratio to enhance operating margins
Long-term targets | Above industry revenue and net sales growth due to geographically superior position in new markets and functional strength in new media and data investment management, including data analytics and the application of new technology; improvement in staff costs/net sales ratio of 0.2 per annum or more depending on net sales growth; net sales operating margin expansion of 0.3 margin points or more on a constant currency basis, with an ultimate goal of almost 20%; and headline diluted EPS growth of 10% to 15% per annum from revenue growth, margin expansion, strategically targeted small and medium-sized acquisitions and share buy-backs