WPP PLC (LSE:WPP) returned to profit in 2021 as the world's biggest advertisement agency heralded the fastest organic growth for over 20 years and said it expects to buyback around £800m shares this year.
Reported operating profit for 2021 was £1.23bn compared to a loss of £2.28bn previously, fueled by demand for digital services, ecommerce, and technology. Sales were £12.8bn, a 13.3% rise on a like-for-like basis, while earnings per share rose 30.6% to 78.5p.
"It has been an outstanding year for WPP," said Mark Read, chief executive officer. "Our top-line growth, driven by strong demand for our services in digital marketing, media, ecommerce and technology, has resulted in our fastest organic growth for over 20 years. As a result, we are two years ahead of our plan, hitting our 2023 revenue target in 2021.
The group reiterated its medium-term targets of 3%-4% annual growth in revenue less pass-through costs from 2023, 15.5-%16.0% headline operating margin in 2023 and annual dividend growth with a pay-out ratio around 40% of headline diluted EPS.
WPP added it expects to execute around £800m of share buybacks in 2022, of which £129m has already been completed thanks to its low leverage and continued strong cash generation. More than £1bn has already been returned.
After suffering pandemic-induced losses, the London-headquartered group underwent a transformation programme. WPP confirmed the programme is on track, saving around £245mln from property, procurement, improving IT, and sharing services.
According to the group, the pandemic accelerated a shift to online shopping, which increased the number of opportunities for brands to connect with consumers on digital platforms, while also levelling the playing field for challenger brands.
"We have made substantial strategic progress, creating the world's leading board-level communications firm through the merger of Finsbury Glover Hering and Sard Verbinnen, and acquiring capabilities in AI, commerce and technology services to leverage across all of WPP for future growth," said Read.