WPP PLC Q1 performance in line with expectations, 2024 guidance reiterated

WPP plc has announced its First Quarter Trading Update.

Key figures

•      Q1 revenue -1.4%; LFL revenue +2.1%

•      Q1 LFL revenue less pass-through costs -1.6% (Q1 2023: +2.9%) with growth in the UK and Western Continental Europe offset by declines in North America and Asia Pacific, which saw strong growth in India offset by a decline in China

•      Global Integrated Agencies revenue less pass-through costs declined 0.7%, with 2.4% growth in GroupM offset by a 3.3% decline at integrated creative agencies with the loss of assignments at a healthcare client and reduced spend at technology companies

•      New client assignment wins from AstraZeneca, Canon, Molson Coors, Daiichi Sankyo, Nestlé, Perfetti, Perrigo, Rightmove and Telefónica. Q1 net new billings of $0.8bn (Q1 2023: $1.5bn)

•      Strong progress on the strategic initiatives laid out at our CMD in January. Burson, GroupM and VML on track to deliver targeted in-year savings and well-placed to benefit from a strong pipeline

•      Continued strategic progress on AI initiatives. WPP Open adopted by over 50,000 of our people and at the heart of Nestlé Oceania, ASEAN and Nestlé Health Science US wins. Collaboration with Google to integrate Gemini 1.5 Pro in WPP Open announced in April. WPP named NVIDIA Industry Innovation Partner of the Year in EMEA

•      2024 guidance reiterated: LFL revenue less pass-through costs growth expected to be 0-1%; with headline operating margin improvement of 20-40bps (excluding the impact of FX)

Mark Read, Chief Executive Officer, said:

“The first quarter of 2024 was very much in line with our expectations with performance reflecting the toughest comparator of the year.

“Strategically, we have progressed well on the priorities set out at our Capital Markets Day at the end of January. We’ve rolled out multiple AI tools through our intelligent marketing operating system WPP Open, including the latest foundation models from Bria, Google and OpenAI, and at Google Cloud Next we launched our Performance Brain to predict the best-performing content ahead of campaigns going live. These products are being deployed at scale, together with investment in training for our people. WPP Open was also at the heart of our most recent new business successes, including major media wins with Nestlé.

“Structurally, VML is now well established and is on track to deliver savings. GroupM is progressing well with its simplification and Burson will be operational in July. I’m very pleased with the progress we are making and we are already seeing the benefits of a simpler and more agile structure for our clients.

“Our outlook for the full year is reiterated. We remain on track to return to growth in the balance of the year, supported by an encouraging new business pipeline and the strength of our business creatively and in media, both powered by new AI capabilities, while our simpler structure will drive organisational flexibility and stronger cash conversion.”