WPP's LFL revenue up 3.5% YoY to £7221 million in H1 of 2023

WPP has registered a revenue growth of 3.5% and a reported growth of 6.9% as it amassed £7221 million in LFL revenue in H1 of 2023, as opposed to the previous year’s £6755 million.

Its Revenue less pass-through costs grew by 5.5% on reported basis and 2.0% on LFL basis to reach £5811 million from last year’s £5509 million.

As per the holding company’s filing, India continues to be one of the top five markets for WPP, globally, with its LFL revenue growth of 2.5% in Q2 2023 and 0.8% in H1 2023.

In terms of the LFL revenue-based ranking, it stands at the fourth spot after UK (9.0%), Germany (6.6%) and China (4.8%) in Q2, this year. With regards to this year’s first half, it ranks third after UK (8.2%) and Germany (5.4%).

The advertising giant’s LFL revenue less pass-through costs growth from Global Integrated Agencies was 2.2% in H1 and 1.5% in Q2, this year. Within this, GroupM contributed to 6.1% growth in H1 and Q2 both, partially offset by a 0.8% LFL decline in H1 and 2.3% in Q2 at other Global Integrated Agencies.

Having adjusted Net Debt of £3.5 billion on June 30, 2023, up £0.3bn with regards to H1 and £0.4bn lower than Q1 2023, the holding company expects its year-end net debt to be flat year-on-year.

According to Mark Read, Chief Executive Officer, WPP, the holding company’s performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in Q2 by lower spending from technology clients and some delays in technology-related projects.

“This was felt primarily in our integrated creative agencies. China returned to growth in the second quarter albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year,” he said.

With this, Read also mentioned that WPP’s media business, GroupM, grew consistently across the first six months as did its businesses in the UK, Europe, Latin America and Asia-Pacific.

“Client spending in consumer packaged goods, financial services and healthcare remained good and, despite short-term challenges, our technology clients represent an important driver of long-term growth,” he opined.

With regards to the Cannes Lions Festival of Creativity, he also stated that WPP agencies performed extremely well by winning five Grand Prix and 165 Lions including one Titanium Lion, five Grand Prix, and 24 Gold awards and Mindshare being recognised as the Media Network of the Year.

“We won major new business assignments with clients including Reckitt, Mondelez, easyJet, Lloyds Banking Group, Pernod Ricard and India’s second-largest advertiser, Maruti Suzuki,” he added.

In the company’s filing, WPP also emphasised that they believe that AI will be fundamental to their business and are excited by its transformational potential. It also pointed out that it is currently working with technology from all the main AI companies, including Adobe, Google, IBM, Microsoft, Nvidia, and OpenAI, with dedicated enterprise platforms, proprietary to WPP, to deliver work to clients that protect their information.

“AI is used extensively across our business today, particularly in GroupM and in Hogarth, our creative production business. Our application of AI includes automation of workflows, speeding up the process of ideation and conception, and producing innovative creative work for clients,” the company said giving the example of Cadbury India’s My SRK ad which used AI to allow Bollywood superstar Shah Rukh Khan to produce personalised ads for local businesses which won a Titanium Lion for Creativity at the 2022 Cannes Lions festival and won again at the festival in 2023, securing a Grand Prix for Creative Effectiveness.

With regards to Medium term guidance, WPP stated that it remains confident in its ability to deliver annual revenue less pass-through costs growth of 3-4% and a headline operating profit margin of 15.5-16%.

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