WPP plc (NYSE:WPP) Q4 2023 Earnings Conference Call February 22, 2024 4:30 AM ET

Company Participants

Mark Read - CEO

Joanne Wilson - CFO

Tom Waldron - Head, IR

Conference Call Participants

Laura Metayer - Morgan Stanley

Lisa Yang - Goldman Sachs

Nicolas Langlet - BNP Paribas

Tom Singlehurst - Citi

Adrien de Saint Hilaire - Bank of America

Julien Roch - Barclays

Adam Berlin - UBS

Mark Read

Thank you very much and welcome everybody to WPP's Preliminary Results for 2023. I'm Mark Read. I'm joined here by Joanne Wilson, our CFO; and Tom Waldron, our Head of Investor Relations.

So turning to the presentation, please take notice of our cautionary statements on Page 2. And for the meeting on Page 3, I'm just going to cover the highlights of our financial performance before Joanne takes through that in more detail. I'll then reiterate the strategy we laid out at the Capital Markets Day just over three weeks ago before taking questions.

Turning to Page 5, the highlights. We had a resilient performance in 2023 with like-for-like growth of 0.9% and a headline operating margin of 14.8%, up 0.2% on a constant-currency basis showed excellent cost-control, and we are pleased to have continued margin progression this year. We had strong growth outside the United States with our non-U.S. business growing 3.3%, the U.K., and India doing particularly well, and despite some challenges in China. However, the U.S. market declined 2.8%, as strong growth in the CPG sector was outweighed by lower revenues from our technology clients and in the retail sector.

In terms of agency performance, GroupM grew 4.9% with a strong performance in Q4, up 5.7%. Our public relations businesses grew 1.4% against a strong comparison last year, but this was offset by a tougher year in our specialist & integrated creative agencies, with the exception of Ogilvy that grew very well and should remind us of the growth potential in our creative agencies.

At our Capital Markets Day, we set our strategy to drive accelerated and more profitable growth with focus on AI and a commitment to invest GBP250 million a year in AI and proprietary technology. And at the Capital Markets Day, we also started new financial targets for the medium-term. Growth target is 3% plus, 16% to 17% headline operating profit margins, and 85% plus operating cash-flow conversion.

And lastly, we also shared our guidance for 2024 with like-for-like revenue less pass-through costs at 0% to 1%, continued progression in our headline operating profit margin, up 20 to 40 basis points.