WPP (WPP) H2 2023 earnings summary

Executive summary

• FY23 revenue less pass-through costs grew 0.9% LFL; headline operating margin improved 0.2pt at constant currency, with disciplined cost control alongside investment in AI, data and technology.

• Net new billings were $4.5bn, including major assignments with Allianz, Mondelēz, Nestlé, PayPal and Verizon; the potential new-business pipeline remained higher YoY.

Financial highlights

• Revenue was £14.845bn, up 2.9% reported and 3.2% LFL; revenue less pass-through costs was £11.860bn, up 0.5% reported and 0.9% LFL.

• Headline operating profit rose 0.5% to £1.750bn; reported operating profit was £531m and reported profit before tax was £346m versus £1.160bn in 2022.

• Reported profit after tax was £197m versus £775m; profit attributable to shareholders was £110m versus £683m, mainly reflecting accelerated brand amortisation and property impairments.

• Reported diluted EPS was 10.1p versus 61.2p; headline diluted EPS declined 4.8% to 93.8p.

Outlook and guidance

• FY24 LFL revenue less pass-through costs growth guidance is 0–1%; headline operating margin improvement guidance is 20–40bps, excluding FX.

• M&A is expected to add 0.5–1.0% to FY24 revenue less pass-through costs growth; current FX rates imply a ~2% drag on that revenue measure, with no meaningful margin impact expected.

• FY24 indications include net finance costs of ~£295m, headline tax rate of ~28%, capex of ~£260m, cash restructuring costs of ~£285m and broadly flat working capital YoY.

• Medium-term targets: 3%+ LFL revenue less pass-through costs growth, 16–17% headline operating margin and 85%+ adjusted operating cash flow conversion.