WPP’s first-half profit before tax grew 6.1% to 419 million pounds (AU$731 million) from last year’s 394 million pounds (AU$687 million) . The company said its performance in the first half of 2022 has been strong.
Reported revenue less pass-through costs was up 12.5%, and up 9.2% on a constant currency basis. Excluding the impact of acquisitions and disposals, like-for-like growth was 8.9%. In the second quarter, like-for-like revenue less pass-through costs was up 8.3%.
WPP expects continued growth in the second half.
Organic growth – defined as like-for-like revenue less pass-through costs growth – is now expected to be 6-7%.
A share buyback program of around £800 million (AU$1.395 billion) is planned for 2022, of which £637 million (AU$1.110 billion) has already been completed.
“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.”
In Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, like-for-like revenue less pass-through costs was up 9.8% in the first half and up 8.0% in the second quarter. Latin America was the strongest region, with continued double-digit growth led by Brazil. Asia Pacific also grew, with sustained momentum in India offsetting a weak China performance, which has been impacted by ongoing lockdowns.
H1 and Q2 financial highlights
◼ 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 30 June 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 EssenceMediacom 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
At the time of writing, WPP was trading at AU$77.47, with a market cap of AU$17.12 billion.