WPP (WPP) H1 2024 earnings summary

Executive summary

• H1 2024 like-for-like net sales declined 1.0%, with sequential improvement in Q2 and growth in GroupM, Ogilvy, and Hogarth, but offset by 2023 client losses and macro pressures, especially in China.

• Strategic progress includes investments in AI, simplification to fewer, stronger brands, and the sale of a majority stake in FGS Global to KKR for $1.7 billion, with £604 million cash proceeds expected in Q4 2024.

• Margin held at 11.5%, up 0.1% like-for-like, driven by cost discipline and structural savings.

• New client assignments included AstraZeneca, Colgate-Palmolive, J&J, and Government of Canada; Q2 net new billings reached $0.9bn.

• Focus remains on value creation, cost discipline, and structural efficiency to improve profitability.

Financial highlights

• H1 2024 revenue less pass-through costs fell 3.6% reported and 1.0% like-for-like; FX was a 2.9pt headwind and M&A contributed +0.3pt.

• Headline operating profit was £646m, down 3% reported but up 0.5% like-for-like; margin stable at 11.5%.

• Headline diluted EPS was 30.9p, down 6.6% year-over-year; interim dividend maintained at 15.0p per share.

• EBITDA (including right-of-use assets) was £756m, down 1.4% year-over-year.

• Adjusted net debt at 30 June 2024 was £3.4bn, up £0.9bn from December 2023, reflecting seasonal cash outflows.

Outlook and guidance

• FY 2024 guidance revised to like-for-like revenue less pass-through costs of -1% to 0%, reflecting continued China weakness and macro pressures.

• Headline operating margin expected to improve by 20-40bps in 2024 before FX, with FX a 10bps headwind.

• Net finance costs expected around £295m; effective tax rate ~28%; capex ~£260m; cash restructuring costs ~£285m.

• No significant M&A expected in 2024; M&A contribution likely below prior range.

• Adjusted free cash flow expected to be flat year-on-year, with H2 catch-up driven by profit phasing and working capital normalization.