08:00 Mon 30 Apr 2018
WPP PLC - WPP First Quarter 2018 Trading Update
FOR IMMEDIATE RELEASE |
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First Quarter 2018 Trading Update
Guidance for 2018 unchanged; fresh look at strategy with focus on growth
n Reported revenue down 4.0% at
n Reported revenue less pass-through costs[1] down 5.1% at
n Constant currency net debt at
n Share buy-backs of
n Net new business of
"We are pleased to announce the Group's first quarter trading update, which is in line with our expectations. Our guidance for 2018 remains unchanged.
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"In the last two weeks we have focused on spending time with our clients and people, and the response has been very encouraging. As expected, our people are getting on with business as usual, and our clients have expressed their continued support for and confidence in
"This should not come as a surprise. As we said to our people across the Group, our companies and client teams are exceptionally good at what they do. They have their own strong leaders, who hold the primary client relationships. Clients have made it very clear that they value their partners within
"
"We intend to build on these strengths by taking a fresh look at our strategy, developing a vision for the Group that recognises the challenges and opportunities presented by the structural shifts in our industry, and executing resolutely against it.
"Our priority is to focus on growth. We will proactively address the under-performing parts of our business and we need to ensure that our capital is deployed to those areas that will grow fastest and maximise shareholder value.
"Looking ahead, we will get even closer to our clients, and provide faster, more agile, more integrated solutions with data and technology at their heart - making it simpler to access the wealth of talent, creativity and capabilities we have within
"Concentrating our efforts on stimulating growth for our clients, and organising the Group to make that possible, is the best way to restore growth for
Review of quarter one
Revenue and revenue less pass-through costs
In the first quarter of 2018, the Group's like-for-like revenue less pass-through costs was down marginally at 0.1%, with the
Regional review
Revenue analysis
£ million |
2018 |
∆ reported |
∆ constant[2] |
∆ LFL[3] |
% group |
2017[4] |
% group |
|
1,252 |
-10.6% |
0.2% |
-1.1% |
35.2% |
1,401 |
37.8% |
|
532 |
6.6% |
6.6% |
5.4% |
15.0% |
499 |
13.5% |
|
760 |
2.5% |
0.8% |
-1.5% |
21.4% |
742 |
20.0% |
AP, LA, AME, CEE[5] |
1,011 |
-4.8% |
2.9% |
2.8% |
28.4% |
1,062 |
28.7% |
|
3,555 |
-4.0% |
2.0% |
0.8% |
100.0% |
3,704 |
100.0% |
Revenue less pass-through costs analysis
£ million |
2018 |
∆ reported |
∆ constant |
∆ LFL |
% group |
20174 |
% group |
|
1,055 |
-12.3% |
-1.7% |
-2.4% |
35.9% |
1,203 |
38.7% |
|
405 |
2.1% |
2.1% |
1.6% |
13.7% |
396 |
12.8% |
|
626 |
4.4% |
2.7% |
-0.2% |
21.2% |
600 |
19.3% |
AP, LA, AME, CEE |
862 |
-5.0% |
2.7% |
2.3% |
29.2% |
908 |
29.2% |
|
2,948 |
-5.1% |
1.0% |
-0.1% |
100.0% |
3,107 |
100.0% |
The
Western Continental Europe, with like-for-like revenue and revenue less pass-through costs down 1.5% and 0.2%, was challenging, particularly in
Business sector review
Revenue analysis
£ million |
2018 |
∆ reported |
∆ constant[6] |
∆ LFL[7] |
% group |
2017[8] |
% group |
AMIM[9] |
1,612 |
-5.7% |
0.0% |
1.2% |
45.4% |
1,709 |
46.1% |
Data Inv. Mgt. |
596 |
-6.9% |
-2.3% |
-2.6% |
16.8% |
640 |
17.3% |
PR & PA[10] |
275 |
-6.7% |
0.5% |
1.5% |
7.7% |
296 |
8.0% |
BC, HW & SC[11] |
1,072 |
1.2% |
8.4% |
2.0% |
30.1% |
1,059 |
28.6% |
|
3,555 |
-4.0% |
2.0% |
0.8% |
100.0% |
3,704 |
100.0% |
Revenue less pass-through costs analysis
£ million |
2018 |
∆ reported |
∆ constant |
∆ LFL |
% group |
20178 |
% group |
AMIM |
1,257 |
-8.4% |
-2.8% |
-0.9% |
42.7% |
1,373 |
44.2% |
Data Inv. Mgt. |
455 |
-6.0% |
-1.1% |
-1.7% |
15.4% |
484 |
15.6% |
PR & PA |
263 |
-7.1% |
0.0% |
1.1% |
8.9% |
282 |
9.1% |
BC, HW & SC |
973 |
0.6% |
7.8% |
1.5% |
33.0% |
968 |
31.1% |
|
2,948 |
-5.1% |
1.0% |
-0.1% |
100.0% |
3,107 |
100.0% |
In the first quarter of 2018, like-for-like revenue less pass-through costs in the Group's media investment management, public relations & public affairs and brand consulting, health & wellness and specialist communications (including direct, digital & interactive) businesses showed the strongest growth, with data investment management and advertising under continued pressure, particularly in the mature markets.
Balance sheet highlights
During the quarter, 11.5 million shares, or 0.9% of the issued share capital, were purchased at a cost of
Average net debt in the first quarter of 2018 was
In
Over the last few years the average net debt/EBITDA ratio has risen steadily to the top end of our target range of 1.5-2.0x. Given the current outlook, it has been decided to revise downwards the upper limit of the target range to 1.5-1.75x. The revised reduction in the ratio to be achieved over the next 12 to 18 months.
Outlook
Financial guidance
Our quarter one preliminary revised forecasts are in line with budget, with a slightly stronger second half, at the revenue less pass-through costs level and show the following:
n Flat like-for-like revenue and revenue less pass-through costs
n Revenue less pass-through costs operating margin flat on a constant currency basis
Long-term targets
Our business remains well positioned to compete successfully and to deliver on our long-term targets:
n Revenue and revenue less pass-through costs growth at least in line with the industry average
n Improvement in revenue less pass-through costs operating margin of between zero and 0.3 margin points, excluding the impact of currency
n Annual headline diluted EPS growth of 5% to 10% p.a. delivered through revenue growth, margin expansion, acquisitions and share buy-backs
n Revised target range of average net debt/EBITDA ratio lowered to 1.5-1.75x
For further information:
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+44 20 7408 2204 |
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+1 212 632 2235 |
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+852 2280 3790 |
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Buchanan |
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+44 7710 130 634 / +44 20 7466 5000 |
This announcement has been filed at the
The following cautionary statement is included for safe harbour purposes in connection with the Private Securities Litigation Reform Act of 1995 introduced in
[1] The Group has changed the description of 'net sales' to 'revenue less pass-through costs' based on the adoption of new accounting standards and recently issued regulatory guidance and observations. There has been no change in the way that this measure is calculated
[2] Percentage change at constant currency exchange rates
[3] Like-for-like growth at constant currency exchange rates and excluding the effects of acquisitions and disposals
[4] Following the implementation of IFRS 15, 2017 results restated resulting in an increase in revenue of
[5]
[6] Percentage change at constant currency exchange rates
[7] Like-for-like growth at constant currency exchange rates and excluding the effects of acquisitions and disposals
[8] Following the implementation of IFRS 15, 2017 results restated resulting in an increase in revenue of
[9] Advertising,
[10] Public Relations & Public Affairs
[11]
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