TIDMWPP
RNS Number : 0937R
WPP PLC
25 October 2019
FOR IMMEDIATE RELEASE 25 October 2019
WPP
Third Quarter Trading Update[1]
Improved performance in Q3; LFL revenue less pass-through costs
+0.5%
(+0.7% incl. Kantar); full-year guidance reiterated
Q3 GBP million[2] reported constant LFL LFL incl. Kantar
================================= =============== ========= ========= ===== =================
Reported revenue 3,291 5.2% 1.9% 1.9% 1.8%
================================= =============== ========= ========= ===== =================
Revenue less pass-through costs 2,725 3.7% 0.5% 0.5% 0.7%
================================= =============== ========= ========= =====
YTD
================================= ====== ===== ====== ====== ------
Reported revenue 9,659 2.8% 0.5% 0.0% 0.2%
================================= ====== ===== ====== ====== ======
Revenue less pass-through costs 7,924 1.1% -1.2% -1.5% -1.1%
================================= ====== ===== ====== ======
n Improvement in Q3 in major markets and sectors
n Global Integrated Agencies back to growth in third quarter
n Significant improvement in North America and China
n Net new business of $3.9 billion in first nine months
Mark Read, Chief Executive Officer of WPP, said:
"WPP's performance in the third quarter is another important
step in the strategy we outlined in December 2018 to return the
Company to sustainable growth in line with our peers in 2021.
"Our growth in Q3 is encouraging but we are focused on
delivering these longer-term goals and know there will be twists
and turns along the way. Our guidance for 2019 remains
unchanged.
"It continues to be a successful year for new business, with
major wins in the quarter including Mondelez and eBay, but just as
importantly we are growing and retaining longstanding clients, such
as the US Marine Corps and Centrica, who value the depth of our
understanding and the longevity of the relationship.
"Yesterday, WPP shareholders voted to approve the Kantar
transaction, which will further simplify our business and
significantly strengthen our balance sheet, while creating a new
partnership for Kantar's future growth and development.
"In the last 12 months, WPP has taken decisive action and made
substantial progress on many fronts: we have fewer, stronger agency
brands; new leadership in many of our companies; enhanced central
teams supporting our companies; and a renewed commitment to
creativity, powered by technology. We have cemented our position as
the largest partner to the world's leading technology firms and,
most importantly, the work we do continues to be highly valued by
our clients as we adapt to their changing needs in a dynamic
marketplace."
Revenue analysis
GBP million 2019 reported constant[3] LFL[4] Acquisitions 2018 LFL incl. Kantar
================================= ======= ========= ============ ======= ============= ====== =================
First quarter 2,992 1.0% -0.8% -1.7% 0.9% 2,964 -1.3%
================================= ======= ========= ============ ======= ============= ====== =================
Second quarter 3,376 2.2% 0.3% -0.3% 0.6% 3,303 0.1%
--------------------------------- ------- --------- ------------ ------- ------------- ------ -----------------
First half 6,368 1.6% -0.3% -0.9% 0.6% 6,267 -0.6%
================================= ======= ========= ============ ======= ============= ====== =================
Third quarter 3,291 5.2% 1.9% 1.9% 0.0% 3,129 1.8%
--------------------------------- ------- --------- ------------ ------- ------------- ------ -----------------
First 9 months[5] 9,659 2.8% 0.5% 0.0% 0.5% 9,396 0.2%
--------------------------------- ------- --------- ------------ ------- ------------- ------ -----------------
Kantar first 9 months[6] 1,898 2.4% 1.2% 1.3%
================================= ======= ========= ============ ======= ============= ====== =================
Group first 9 months incl.
Kantar 11,557 2.7% 0.6% 0.2%
--------------------------------- ------- --------- ------------ -------
Revenue less pass-through costs analysis
GBP million 2019 reported constant LFL Acquisitions 2018 LFL incl. Kantar
=================================== ====== ========= ========= ====== ============= ====== =================
First quarter 2,471 -1.0% -2.8% -3.3% 0.5% 2,496 -2.8%
=================================== ====== ========= ========= ====== ============= ====== =================
Second quarter 2,728 0.6% -1.3% -1.7% 0.4% 2,713 -1.4%
----------------------------------- ------ --------- --------- ------ ------------- ------ -----------------
First half 5,199 -0.2% -2.0% -2.5% 0.5% 5,209 -2.0%
=================================== ====== ========= ========= ====== ============= ====== =================
Third quarter 2,725 3.7% 0.5% 0.5% 0.0% 2,628 0.7%
----------------------------------- ------ --------- --------- ------ ------------- ------ -----------------
First 9 months(5) 7,924 1.1% -1.2% -1.5% 0.3% 7,837 -1.1%
----------------------------------- ------ --------- --------- ------ ------------- ------ -----------------
Kantar first 9 months(6) 1,442 1.9% 0.8% 0.8%
=================================== ====== ========= ========= ====== ============= ====== =================
Group first 9 months incl. Kantar 9,366 1.2% -0.9% -1.1%
----------------------------------- ------ --------- --------- ------
Third Quarter Review
Revenue
In the third quarter of 2019, reported revenue from continuing
operations (i.e. excluding Kantar) was up 5.2% at GBP3.291 billion.
Revenue in constant currency was up 1.9% compared with last year,
the difference to the reported number reflecting the weakening of
the pound sterling against a number of currencies, but particularly
the US dollar. On a like-for-like basis, revenue was also up 1.9%,
compared with -0.9% in the first half. Geographically,
like-for-like revenue growth in the third quarter was stronger in
Asia Pacific, Latin America, Africa & the Middle East and
Central & Eastern Europe, with Western Continental Europe and
the United Kingdom up strongly, partly offset by North America.
South East Asia, Latin America and the Middle East were
particularly strong with Africa and ANZ more difficult. By sector,
the Group's Global Integrated Agencies were up strongly, but Public
Relations and the Group's Specialist Agencies performed less
well.
In the third quarter, there was an improvement in revenue less
pass-through costs from continuing operations, with constant
currency and like-for-like growth of 0.5%, the first quarter of
growth since the second quarter of 2018, and significantly stronger
than the -2.5% in the first half. All regions showed improvement
compared with the first half.
Regional review
Revenue analysis - Third Quarter
LFL incl.
GBP million 2019 reported constant[7] LFL[8] 2018 Kantar
================= ====== ========= ============ ======= ====== ----------
N. America 1,243 3.8% -1.8% -1.9% 1,197 -1.9%
================= ====== ========= ============ ======= ====== ----------
United Kingdom 426 1.4% 1.4% 1.5% 420 1.2%
================= ====== ========= ============ ======= ====== ----------
W. Cont Europe 613 4.6% 3.6% 1.9% 586 1.8%
================= ====== ========= ============ ======= ====== ----------
AP, LA, AME,
CEE[9] 1,009 9.0% 5.8% 6.9% 926 6.4%
================= ====== ========= ============ ======= ====== ----------
Total Group[10] 3,291 5.2% 1.9% 1.9% 3,129 1.8%
----------------- ------ --------- ------------ ------ ----------
Kantar[11] 650 3.4% 1.0% 1.4%
================= ====== ========= ============ =======
Group incl.
Kantar 3,941 4.9% 1.7% 1.8%
----------------- ------ --------- ------------
Revenue less pass-through costs analysis - Third Quarter
LFL incl.
GBP million 2019 reported constant LFL 2018 Kantar
================= ====== ============= ========= ====== ====== ----------
N. America 1,034 3.2% -2.3% -3.5% 1,001 -3.2%
================= ====== ============= ========= ====== ====== ----------
United Kingdom 334 0.6% 0.6% 3.1% 332 2.1%
================= ====== ============= ========= ====== ====== ----------
W. Cont Europe 518 3.4% 2.4% 1.7% 501 1.8%
================= ====== ============= ========= ====== ====== ----------
AP, LA, AME,
CEE 839 5.7% 2.7% 4.0% 794 4.1%
================= ====== ============= ========= ====== ====== ----------
Total Group(10) 2,725 3.7% 0.5% 0.5% 2,628 0.7%
----------------- ------ ------------- --------- ------ ----------
Kantar(11) 492 3.8% 1.3% 1.6%
================= ====== ============= ========= ======
Group incl.
Kantar 3,217 3.7% 0.6% 0.7%
----------------- ------ ------------- ---------
North America, although still negative, improved, with
like-for-like revenue less pass-through costs from continuing
operations down 3.5%, compared with -8.8% in the first quarter and
-5.9% in the second quarter. Wunderman Thompson, VMLY&R, Grey
and AKQA showed significant improvement compared with the first
half.
The United Kingdom continued to grow, with like-for-like revenue
less pass-through costs from continuing operations up 3.1%,
compared with +2.9% in the second quarter and +1.2% for the first
half, as Wunderman Thompson, VMLY&R, BCW and AKQA showed
significant improvement.
Western Continental Europe grew for the first time this year,
with like-for-like revenue less pass-through costs from continuing
operations up 1.7% in the third quarter, compared with -0.2% in
both quarter one and quarter two. Germany, the Group's largest
market in the region, showed significant improvement, together with
Austria, Belgium, Portugal, Spain, Switzerland and Turkey, with
France, Italy and the Netherlands more challenging.
Asia Pacific, Latin America, Africa & the Middle East and
Central & Eastern Europe was the strongest performing region,
with like-for-like revenue less pass-through costs from continuing
operations, up 4.0% in the third quarter, compared with 0.7% growth
in the second quarter and 1.1% for the first half. Latin America,
the Middle East and Central & Eastern Europe performed
particularly well, with Asia Pacific and Africa more difficult. In
Asia Pacific, all of the Group's major markets, except China and
Thailand, grew, with India, the Group's second largest market in
the region, up over 15%. Australia & New Zealand performed
below the Group average in the third quarter, with some of the
Group's creative and specialist businesses under pressure.
Business sector review
Revenue analysis - Third Quarter
GBP million 2019 reported constant[12] LFL[13] 2018
========================== ====== ========= ============= ======== ======
Global Int. Agencies[14] 2,542 7.0% 3.7% 3.4% 2,376
========================== ====== ========= ============= ======== ======
Public Relations 241 6.0% 2.0% 0.4% 227
========================== ====== ========= ============= ======== ======
Specialist Agencies 508 -3.5% -6.3% -4.8% 526
========================== ====== ========= ============= ======== ======
Total Group[15] 3,291 5.2% 1.9% 1.9% 3,129
-------------------------- ------ --------- ------------- -------- ------
Kantar[16] 650 3.4% 1.0% 1.4% 629
========================== ====== ========= ============= ======== ======
Group incl. Kantar 3,941 4.9% 1.7% 1.8% 3,758
-------------------------- ------ --------- ------------- -------- ------
Revenue less pass-through costs analysis - Third Quarter
GBP million 2019 reported constant LFL 2018
====================== ====== ========= ========= ====== ======
Global Int. Agencies 2,036 4.9% 1.7% 1.7% 1,941
====================== ====== ========= ========= ====== ======
Public Relations 225 4.5% 0.6% -0.9% 215
====================== ====== ========= ========= ====== ======
Specialist Agencies 464 -1.7% -4.7% -3.4% 472
====================== ====== ========= ========= ====== ======
Total Group(15) 2,725 3.7% 0.5% 0.5% 2,628
---------------------- ------ --------- --------- ------ ------
Kantar(16) 492 3.8% 1.3% 1.6% 475
====================== ====== ========= ========= ====== ======
Group incl. Kantar 3,217 3.7% 0.6% 0.7% 3,103
---------------------- ------ --------- --------- ------ ------
In the third quarter of 2019, like-for-like revenue less
pass-through costs in the Group's Global Integrated Agencies was up
1.7%, compared with -3.4% in quarter one and -0.3% in quarter two.
This improvement came largely from North America, the United
Kingdom and Continental Europe, with Wunderman Thompson, VMLY&R
and Grey showing significant improvement compared with the first
half. Following the merger, VMLY&R grew in the third quarter
both globally and in the United States.
Public Relations, with like-for-like revenue less pass-through
costs -0.9%, showed some improvement compared with -1.5% in the
first half and -2.6% in quarter two. This was driven by an
improving trend in the United Kingdom and Western Continental
Europe, partly offset by slightly weaker performance in North
America and Asia Pacific.
The Group's Specialist Agencies, with like-for-like revenue less
pass-through costs down 3.4%, showed a significant improvement over
the -7.1% in quarter two and -5.7% in the first half, with
Geometry, AKQA, Brand Consulting and Commarco stronger.
Balance sheet highlights
Average net debt in the first nine months of 2019 was GBP4.477
billion, compared to GBP5.102 billion in 2018, at 2019 exchange
rates, a decrease of GBP625 million. This improvement is largely
explained by the disposal of various non-core associates and
subsidiaries over the last 12 months (including one of the Group's
freehold properties in New York), which in aggregate realised
GBP456 million. Net debt at 30 September 2019 was GBP4.469 billion,
compared to GBP4.962 billion on 30 September 2018, at 2019 exchange
rates, a decrease of GBP493 million.
No shares were purchased in the first 9 months of 2019.
Financial guidance
Our financial guidance for 2019 was previously given including
Kantar and remains unchanged, both including and excluding Kantar,
as follows:
n Like-for-like revenue less pass-through costs down 1.5% to
2.0%
n Headline operating margin to revenue less pass-through costs
down around 1.0 margin point on a constant currency basis
(excluding the impact of IFRS 16)
For further information:
Investors and analysts
Peregrine Riviere } +44 7909 907193
Lisa Hau } +44 7824 496015
Fran Butera (US) } +1 914 484 1198
Media
Chris Wade } +44 20 7282 4600
Kevin McCormack (US) } +1 212 632 2239
Juliana Yeh (APAC) } +852 2280 3790
Richard Oldworth, +44 20 7466 5000
Buchanan Communications +44 7710 130 634
wpp.com/investors
This announcement is being distributed to all owners of Ordinary
shares and American Depository Receipts. Copies are available to
the public at the Company's registered office.
The following cautionary statement is included for safe harbour
purposes in connection with the Private Securities Litigation
Reform Act of 1995 introduced in the United States of America. This
announcement may contain forward-looking statements within the
meaning of the US federal securities laws. These statements are
subject to risks and uncertainties that could cause actual results
to differ materially including adjustments arising from the annual
audit by management and the Company's independent auditors. For
further information on factors which could impact the Company and
the statements contained herein, please refer to public filings by
the Company with the Securities and Exchange Commission. The
statements in this announcement should be considered in light of
these risks and uncertainties.
Appendix
Regional Review
Revenue analysis - First Nine Months
LFL incl.
GBP million 2019 reported constant LFL 2018 Kantar
================= ======= ========= ========= ======= ======= ==========
N. America 3,577 0.8% -4.9% -5.8% 3,550 -5.5%
================= ======= ========= ========= ======= ======= ==========
United Kingdom 1,334 1.4% 1.4% 1.4% 1,316 1.2%
================= ======= ========= ========= ======= ======= ==========
W. Cont Europe 1,876 2.2% 2.8% 1.2% 1,836 1.3%
================= ======= ========= ========= ======= ======= ==========
AP, LA, AME,
CEE 2,872 6.6% 5.8% 6.5% 2,694 5.9%
================= ======= ========= ========= ======= ======= ==========
Total Group[17] 9,659 2.8% 0.5% 0.0% 9,396 0.2%
----------------- ------- --------- --------- ------- ----------
Kantar[18] 1,898 2.4% 1.2% 1.3% 1,855
================= ======= ========= ========= ======= =======
Total Group
incl. Kantar 11,557 2.7% 0.6% 0.2% 11,251
----------------- ------- --------- --------- -------
Revenue less pass-through costs analysis - First Nine Months
LFL incl.grid
GBP million 2019 reported constant LFL 2018 Kantar
================= ====== ========= ========= ======== ====== --------------
N. America 2,985 0.9% -4.8% -6.1% 2,959 -5.7%
================= ====== ========= ========= ======== ====== --------------
United Kingdom 1,026 0.9% 0.9% 1.9% 1,018 0.8%
================= ====== ========= ========= ======== ====== --------------
W. Cont Europe 1,560 0.4% 0.9% 0.4% 1,553 0.5%
================= ====== ========= ========= ======== ====== --------------
AP, LA, AME,
CEE 2,353 2.0% 1.4% 2.1% 2,307 2.5%
================= ====== ========= ========= ======== ====== --------------
Total Group(17) 7,924 1.1% -1.2% -1.5% 7,837 -1.1%
----------------- ------ --------- --------- ------ --------------
Kantar(18) 1,442 1.9% 0.8% 0.8% 1,415
================= ====== ========= ========= ======== ======
Total Group
incl. Kantar 9,366 1.2% -0.9% -1.1% 9,252
----------------- ------ --------- --------- ------
Business Sector Review
Revenue analysis - First Nine Months
GBP million 2019 reported constant LFL 2018
===================== ======= ========= ========= ====== =======
Global Int Agencies 7,416 4.0% 1.7% 1.2% 7,130
===================== ======= ========= ========= ====== =======
Public Relations 712 4.6% 1.2% -0.6% 681
===================== ======= ========= ========= ====== =======
Spec. Agencies 1,531 -3.4% -5.5% -5.2% 1,585
===================== ======= ========= ========= ====== =======
Total Group(17) 9,659 2.8% 0.5% 0.0% 9,396
--------------------- ------- --------- --------- ------ -------
Kantar(18) 1,898 2.4% 1.2% 1.3% 1,855
===================== ======= ========= ========= ====== =======
Group incl.
Kantar 11,557 2.7% 0.6% 0.2% 11,251
--------------------- ------- --------- --------- ------ -------
Revenue less pass-through costs analysis - First Nine Months
GBP million 2019 reported constant LFL 2018
===================== ====== ========= ========= ====== ======
Global Int Agencies 5,894 1.9% -0.3% -0.6% 5,786
===================== ====== ========= ========= ====== ======
Public Relations 667 3.4% 0.1% -1.3% 645
===================== ====== ========= ========= ====== ======
Spec. Agencies 1,363 -3.1% -5.3% -5.3% 1,406
===================== ====== ========= ========= ====== ======
Total Group(17) 7,924 1.1% -1.2% -1.5% 7,837
--------------------- ------ --------- --------- ------ ------
Kantar(18) 1,442 1.9% 0.8% 0.8% 1,415
===================== ====== ========= ========= ====== ======
Group incl.
Kantar 9,366 1.2% -0.9% -1.1% 9,252
--------------------- ------ --------- --------- ------ ------
[1] As a result of the Board's decision on 12 July to enter into
an agreement to sell 60% of Kantar, Kantar is now categorized as an
"asset held for sale" in accordance with IFRS 5: Non-current assets
held for sale and discontinued operations. Accordingly, the Third
Quarter Update reports revenue and revenue less pass-through costs,
on a geographic and sector basis, excluding Kantar. 2018
comparators have been restated to exclude Kantar. For transparency,
we will continue to report results both including and excluding
Kantar until FY 2019.
[2] Continuing operations
[3] Percentage change at constant currency exchange rates
[4] Like-for-like growth at constant currency exchange rates and
excluding the effects of acquisitions and disposals
[5] Continuing operations
[6] Discontinued operations
[7] Percentage change at constant currency exchange rates
[8] Like-for-like growth at constant currency exchange rates and
excluding the effects of acquisitions and disposals
[9] Asia Pacific, Latin America, Africa & Middle East and
Central & Eastern Europe
[10] Continuing operations
[11] Discontinued operations
[12] Percentage change at constant currency exchange rates
[13] Like-for-like growth at constant currency exchange rates
and excluding the effects of acquisitions and disposals
[14] Global Integrated Agencies
[15] Continuing operations
[16] Discontinued operations
[17] Continuing operations
[18] Discontinued operations
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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