WPP (WPP) H2 2024 earnings summary

Executive summary

• Net revenue growth for 2024 was -1%, at the lower end of guidance, with GroupM (+2.7%) and Hogarth growth offset by China and historical client losses.

• Headline operating margin improved to 15.0% (+40bps), driven by cost savings and disciplined investment in AI, data, and WPP Open.

• Strategic transformation advanced with a simpler structure, major investment in WPP Open, and a stronger balance sheet.

• Key takeaways: strong strategic progress, improved new business in H2, and better cash conversion.

• Top 25 clients grew 2%, with robust media production, but China was an 80 bps drag and Q4 was particularly soft due to weaker discretionary spend.

Financial highlights

• Like-for-like revenue less pass-through costs fell 1% for 2024; Q4 was notably weak.

• Headline operating margin rose to 15.0% (2023: 14.8%), aided by cost savings and disciplined management.

• Operating cash flow conversion reached 86% (2023: 73%) due to strong working capital management.

• Year-end net debt was GBP 1.7 billion, down GBP 0.8 billion year-on-year, helped by the FGS Global sale.

• Headline diluted EPS was GBP 88.3, down 5.9% reported, flat like-for-like; total dividend for 2024 was GBP 39.4, flat year-on-year.

Outlook and guidance

• 2025 guidance: like-for-like revenue range of flat to -2%, reflecting macro caution and client loss runoff before new wins ramp up.

• Headline operating margin expected to remain flat, excluding FX, with cost savings offsetting increased investment in WPP Open, AI, and data.

• Cash restructuring costs expected to fall to GBP 110 million in 2025; adjusted operating cash flow before working capital targeted at GBP 1.4 billion.

• Medium-term targets reaffirmed: 3%+ organic net revenue growth, 16-17% margins, and 85% cash conversion.

• M&A to reduce revenue less pass-through costs by ~3.0 points, mainly due to FGS Global disposal.