Wednesday, November 30, 2022

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    WPP revenues up 10% in third quarter despite currency woes and rising debt

    The UK-based holding company has released its financial performance figures for the third quarter. 

    WPP increased its revenues by over 10% in the last three months while taking on billions in debt, the company has revealed. The British agency group, which owns networks such as GroupM, Ogilvy, AKQA and VMLY&R, brought in $1.7bn of new business in the third quarter of 2022 – but its debts have risen twofold since September 2021 to £3.5bn.

    Mark Read, chief executive officer of WPP, said: “Our new business success reflects the quality of our creative work, our strength in media and our ability to deliver integrated solutions to clients.“

    The firm raised its guidance to investors, predicting that net revenues for the full year would likely reach 7% – in line with similar guidance from competitors Interpublic Group (IPG) and Publicis Groupe.

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    How did WPP agencies perform in Q3?

    Across the whole group, revenue was £3.6bn – an increase of 10.3% on the previous six months and an increase of 2.7% on last year’s third quarter.

    The group brought in $5.1bn of new business, including account wins with Samsung, Nestlé and Discovery – a $500m increase on the previous year.

    “WPP continues to show strong momentum, reflecting broad-based growth across our agencies, markets and industry sectors and the investment by our clients in marketing, e-commerce and digital transformation,“ said Read.

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    The group’s agency businesses collectively increased revenues by 4.3%, relative to the same period last year. Hogarth, Ogilvy and AKQA were each strong performers in the stable, while GroupM grew 4.7%.

    WPP’s PR companies continued to pull in cash, with like-for-like revenue up 5.8% on 2021 and 19.1% on 2019. BCW, H+K and FGS Global were the strongest performers. Specialist agencies lagged, however, with revenue down 3.9% on last year.

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    Headwinds in Britain

    Revenues in the UK rose 4.2% and were 13.3% higher than they were in the third quarter of 2019. But currency headwinds in the UK, as well as acquisition costs, have impinged upon WPP’s organic growth. Excluding those factors, like-for-like growth was 2.7% – when the impact of currency was taken into account, however, like-for-like organic growth was 1.4%.

    Despite the billions of dollars brought in from new business, the group’s debt has also ballooned. In September 2021, WPP’s debt was £1.7bn, but as of September 30 this year it had more than doubled to £3.5bn. Some of that will have funded the company’s recent acquisitions, including e-commerce firms Newcraft and Corebiz, PR company JeffreyGroup and design business Passport.

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    The company’s cost-cutting program continues in the meantime, with the firm aiming to slice £300m of spending on freelancers and contractors by the end of the year.

    Read concluded: “We enter the last quarter of the year with confidence, based on the leading competitive position of our businesses, our client momentum and the knowledge that the actions we have taken to strengthen WPP leave us well placed to support our clients in navigating the economic uncertainties ahead.”

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