WPP PLC (WPP) Q4 2022 Earnings Call Transcript

For the period ending December 31, 2022

February 23, 2023 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to WPP Preliminary Financial Results Conference Call and Webcast. [Operator Instructions]. Today's conference is being recorded. At this time, I would like to hand the conference over to WPP's CEO, Mr. Mark Read. Please go ahead, sir.

Mark Read

Thank you very much, and good morning, everyone, and welcome to the WPP 2022 preliminary results presentation. As you know, we now do this as more of a Q&A session. We should take the presentation as read. It's available online, rather than take up your time with that. We thought we could get straight into questions.

Maybe I'll make a few preliminary remarks. I'm here with John Rogers, our CFO. So John and I will take your questions. Look, I think we had a good 2022. We grew 6.9% in the year. A respectable or more than respectable Q4, 6.4%, perhaps somewhat better than we'd expected after a somewhat softer Q3, but that was in part driven by comparatives. But I think the momentum we had for the year carried into Q4, and I think you'll see some of that momentum carry into next year through our guidance.

We had a very broad-based performance. Our Integrated Agencies is up 6.9%, with a 3-year growth of 9.5%. Strong performance in GroupM, Ogilvy, AKQA, Hogarth. our PR businesses were up 8.2% like-for-like with a strong performance, particularly from Hill+Knowlton, and our Specialist Agencies is up 5.6%. So functionally, we grew strongly across all our functions. And regionally as well, North America, up 6.6%, U.K. up 7.6%. I've called out particularly resilient Western Continental Europe at 5.5% and Asia Pacific, rest of the world, up 8% last year. So a broad-based performance across services and regions, a strong competitive performance from leading at Cannes to a new business number close to $6 billion.

We continue to invest in the business. And we talked a lot on the call about the impact of AI on our industry mix against the fundamentals. Our transformation savings are ahead of plan, and we're on track to deliver the GBP 70 million of savings by 2025.

And then lastly, our guidance. So our guidance for like-for-like revenue of passing cost is 3% to 5%, and headline operating margin of around 15%. And I think that's based on conversations that we have with clients, what they're telling us, what they intend to spend for the year, really driven by their continued desire to invest in their business and invest in brands. I think in part also driven by the complexity of the environment and the new media opportunities available to them on platforms like Netflix and TikTok and retail media platforms, as well as the transformation in WPP's business and expansion we've made in new areas around data, technology and e-commerce.