WPP PLC (WPP) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 27, 2023 4:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Mark Read

Good morning, everybody. And welcome to our 2023 First Quarter Results Call. I'm here in Sea Containers with John Rogers, Tom Waldron and our Investor Relations team. And I'll just take you briefly through the highlights before John takes you through our financial performance. And we'll come back to close to the end and take your questions.

On page 2, of the presentation you should note our cautionary statement, which is important.

So turning to page 3, and then 4, are highlights of the first quarter. I think we had a positive start to the year, reflecting continued momentum in the business and continued investment in our offer. We delivered first quarter growth of 2.9%. I think, pretty much in line with our expectations, and maybe even very, very slightly ahead against probably the toughest comp of last year.

We saw growth across the business at 3% Ii our Integrated Agencies, 2.2% in our Public Relations, Public Affairs firm, and 1.9% in our Specialist Agencies, I should just call out strong performance from GroupM at 6.1% and also strong performance from Ogilvy. We continue to improve our work. We topped the WARC, the World Advertising Research Council ratings in media, in creative and effectiveness in all three categories, and delivered $1.5 billion in net new business in Q1.

I should also point out Ogilvy's won Agency of the Year, at Clio's two nights ago and reflects continued investment in our creative capability. That has been supported by acquisitions, particularly in influencer markets, as we made two acquisitions, we'll come on to later, and chose the partnerships. KKR took a minority interest in FGS Global, we will talk a little bit about that later on, and what that means for us. And then overall, after positive first quarter, we're leaving our guidance for the year unchanged, which remains at like-to-like revenue at 3% to 5%, and a headline operating margin of around 15%.

So those are the highlights. John, you want to take us through their financial performance in more detail.

John Rogers

Thank you, Mark. So moving to the financials for the first quarter of 2023. So coming first to slide 6, revenue less pass-through costs. At a reported level we've seen an increase of 9.9% for the quarter. This is supported by 6.3% point tailwind in relation to FX, due to the weakness in Sterling relative to last year, and also our targeted M&A strategy that Mark has referred to, added 0.7 percentage points to reported growth. And actually stripping out the impact of the disposal of our business in Russia last year, the contribution was 1%.