WPP (WPP) 5 Aug 222022 Q2 Earnings call transcript

Welcome to the WPP 2022 Interim Results Conference Call and Webcast. [Operator Instructions] Today’s conference is being recorded. I will now hand over to your host, Mark Read, CEO of WPP, to begin. Mark, please go ahead.

Thank you very much and good morning, everybody.

sort morning’s take as we’ll think of presentation this viewed. I

remarks it, want I’ll online. opening go to you it’s to make then questions. on look few efficiency, If of at available we interest In a and the

quarter look think had X.X%, we we actually look GIAs. despite our which actually growth -- across I so growth half, demand Agency indeed, through strong X.X% in accelerated from first reflected X.X% So only in good major slightly across performance this agency stronger media, first slightly pandemic, And in all lower notably markets, clients. We up at is our the our is a I tougher in second that somewhat than had first strong of the in the good Geographically, Public half, quarter, as so comparatives. creditable actually I business if very U.S., first the our up board importance the PR relations better The the a standout-performing think WPP’s the agencies continued half, overall. at X.X%. our up all our across growth clients. perhaps business, QX. the is And with the Specialist in X% around than reflecting to been average growth. creative XX.X%, has performance integrated

all growth for be recent there. sort rest last due to the except was It the before of turnaround pre-pandemic. U.S. relative So in outperformance growth XXXX where a impacts and outperformance the of obviously, from of I we’re the our lockdowns in QX were think seeing markets, might quarter China, to marked of Again, business we the

the the leading’s of in I think strong of and stronger XXXX media COMvergence we’re as that’s business, reflected ranked and creative is business Ogilvy business in X.X quarter. solid very [GBP We creative Actually, split year more world’s in a than compared of named company billion across wins a creatively. second Network performance to In we business, that the Audible, were Year. billion] creative Good wins our by media a Cannes most at and the in $X.X bit media our were of probably likes our our group, of both group new (sic) evenly media this little and Danone, Audi, very Nationwide. last. the year

continue organically, M&A. business, We our invest Everymile data initiatives through to and both and business, in Choreograph, the like

half track, Australia, on of Corebiz million] the $XXX strongest deliver So (sic) program’s of and significant improve Bower XXX sheet, EssenceMediacom so million Partners. service, to our House in well and Digital, our sheet, clients for to a and simplifying position guidance. and transformation balance XXX the so and And we year. is for million buybacks its program savings first integrate in e-commerce on balance easier GBP as GBP able company share in to as company this given really in were make the XXX The a to Cloud of year our Brazil million Bridge and the execute business Salesforce the [GBP of Marketing it for Design the raise creation the expect

with account X% the for X.X% leaving expectations our QX, taking operating able Net we’re to means and that revised change into X.X% XX around up net-net, a from really our balance the of to to So to the in basis X%, headline outperformance margin XXXX. for of points. increase sales year guidance the guidance perhaps

you good balance we have. to to confident why questions start year. for in any don’t So I’d that’s turn half, sort the year, of delivering point, At net first the the that a of summary that the say,

Macquarie. of [Operator Tim Instructions] Our first question Nollen to goes

guess, I obvious is ask, results which the fine. seem your question, I’ll

Your guess growth. happen I the sticks to number guess. next guidance year, But out understandably, that and is fine, I going is yet your everyone slides digital one what’s about to worried seems me from

I first year ago. this in half right, if XX% XX% was a up the I up versus got think

we’ve HX. So about what I’m some whether from U.S. heard in the businesses beginning going already of wondering to or ad-related comments number here is happen -- and in talking a slowdown, QX in

However, is So categories I some guess that -- some spending you a as to looks in may because quick general seeing budgets. you solid digital have my well? this question your is, growth be these cut

spend. digital lot your breakdown, several global do of versus just kind the versus Is continuing? the big of a advertisers comments You and marketing advertising, of brand to other between companies. understand general from I’m quick trying are cuts sort this difference outlook continuing that to advertisers blue-chip plans

I clients, slower second an first And Meta year, half as said, peers by of X%. about the the significant have peers no be I delivered So net delivered X% next WPP this what year half consistent In year, what the about speaking, that said dissimilar is said growth, I across cuts uncertain and which from we half likely we somewhat a delivered are XXXX. think not Google of in is a half strong sales pretty year demand first what our to what our than saying. XX%, broadly characterize and think the first

perspective, a result those more is say that either So of within sales the you’d competitive don’t that they to can nature mind, slowdown. with that macro headwinds facing dynamics, net more is you a say that -- context, than that are think of clients broader to few companies my the a I do it from think I a have

things Google, ups pretty as meant look think characterizes strong. think characterize were from Amazon, I by they overall Comcast said but at the no market slowdown. comments which as downs the they and they stable. choppy some I If you some

slowdown. have I where companies broader do to tended for the companies reasons, perhaps those like will think worse, to obvious those to most point macro

I likely to a slowdown broad latter than dynamics those the macro it’s former. the or think results know companies, more competitive the don’t So that it’s in be I but of

of I I Now that and are said, XXXX. we times we are as to that’s not for more say our slowdown. most looking uncertain facing peers a think in And

things are you second they say somewhat is budgets the not. to of for slower But think have be first. cut half sort We being I of in quickly don’t in in than those more companies are year their looking that to can cuts the or the seen that down digital

more Google-rs nature things, it of far. the of the Some or of be has that of it’s be the -- so and those I come I venture the more companies macro think bit be it capital-backed, on or of so venture those maybe to think -- some it. capital little market, froth are of reliant app a out some than downloads, is that type slowdown types a that might of But business, likely may

sort it’s under-index down also to a well digital both we the I build reflects your comments SMEs point, the market, that think, Chinese of growth think, just coming just relative the Mark’s in Tim, -- XX% to reflects XX% and perspective, market. also sort of market John, on as from of digital size to to of growth, I to which

than why figures have bit perhaps our that been robust suggest So the more little broader market. might a

Research. Arthur of goes Doug Huber the And next to question

on month tailwind call, don’t a this, know little could that call earlier me this reopens the with trade was picks second the and up. if We in I China’s as he a morning, and and Brian half provide did you for early the making weakness first Wieser point, a said a quarter but ago, it that in

you’re something of sort that’s That’s if wondering I’m one. expecting. So question

a Yes. better part I -- depend relatively -- our first slightly really, think baking depend I small half second we’re we’re no. the think half It than don’t of doesn’t in business. but something don’t China, our I numbers it’s situation Chinese on in it’s massive think the I change a massive a that on mean,

contrast stark I mean there and QX QX. between was in performance a very

we up Mainland down the And X.X. QX, XX.X. QX, for we were So were China

that So the showed the of in the just quarter. impact second marked lockdowns

fair in business. market of not overall about to recovery as it’s the contrasting it’s bounce-back some expect the we’d of about our but level performance, certainly degree QX. to X% Mark some said, see given say in that think to half It’s seen in QX, QX to of that, second probably the -- I

insignificant, percentage. it’s it’s not large but not a So

it. Got

continue clients you third-party hurt answer. client demand Choreograph, second the is a does elimination -- it again, now more solutions your given on And -- be which regardless question, with data, sort done issue, that delaying when solving the cookie assumption it’s that probably of just to obviously, all But the the difficult Okay. to neutral for help not Or it’s first-party work if? of eliminated, cookies on is Chrome cookies third-party work you’ve you, you? will on is of new

No.

it. the things more just change us uncertainty, another. another clients that market doesn’t need means it change another think I for to or way in one navigate It’s really help

a remain company cookie the consumer I increasing by to with either one form protecting of going think think an view protection to I we’re going the another landscape identity tech data or part else. replace political we that the of of be owned ad privacy or that don’t is something

and West it’s isn’t the of really, consumer. permission of with done kind collection right needs think pretty that collection the I the be the data to Wild clear of data

just integration and So requires of another that the sorts replace system. sort -- data, looking with or not not to unified behavior. sort of marketing purchase PII ID cookie of the we’re But of all the data-driven

think So a I more advice. need that more these data landscape, clients complex

on other where in important, financial services -- And of serve of much today will kind goods -- able both be and And retail, it’s data with strict I and need happening is to it and will been -- there -- broadly those what is on -- speaking, I lot Android been WBA. issue mobile where really that packaged think on be I’ve health that’s happening automotive, very has of PII But a sorts interesting the really, I what Chrome, very both of the if the are companies pharma where of work will important included on there’ll less that cookies think sort issue. PII where care to the be travel, happen really that web do the extension more be relevant. the sector we really. iPhone in the And hasn’t major The and the because activity we coalesced collection we companies major and browsers, iPhone mean, to device. a clients.

that’s to significant, a as what pointed that’s and people much, change. I have more think much

say for the would other it’s one the I thing main. So or neither us in

fact because I I fact generally always we maybe we’ve can clients And -- just said the mean of delays that at the us a and help forever that doing through longer And are the at way gives the think prepare time transition that the ecosystem, obviously, that delays, customers the And the changing the cookies clients to different another think world they the world. complexity no to year our which the for our we or it’s us we’re around ecosystem complexity. is complexity. clients and help navigate in to I is just forward. going dynamic how looking of new a can with engagement to from add cookies moment, lot that. good to more adds speaking, for for within target

Got it.

the the And John, in guided great what guidance which toward. down, performance, still one half just for margin in. XX bps, growth, could revenue Okay. of I of first improvement you then more kind if is margins year. squeeze terms

what are the second parts leverage half? So operating the key in the of

Yes.

mean, guidance of a year-on-year that in for than the is way, XX the we as little gave around at what I you expected. first mix we bit prelims that being bps and QX half. guess, said, much was a probably the down the I So very different

pretty bit line in through more in little little bit where on personnel expected recovery with staff incentives. staff costs, the much establishment costs and we a costs, to a the relation So a bit better, little bang tougher

with our on course, some on and costs bps shape see the a gets to together, down albeit sort all it but the of we’d XX with the error, XX in you So of this, in costs. to year. with that in second G&A I think incentives. that XX XX half, sort bps guided half to upside half; Maybe because to on the XX about the pre-incentives Probably the of a half. And roughly XXX first travel in half bps about decline the the impact guided. an probably for less personnel That’s full the staff full in of gives down trading half, bps XX to or of statement. your we’re bps summed QX cost, shape the in then the to margin XX bp than To the half On bps, of for XXX consistent bps we for there’s the some second XX about together, at in in the of of last clearly or that first line an expect that, half. increase requires XXX for an XX when bps the you combine XX roughly XX so year the bit IT, year. down see took different, which little when margin maybe of XX establishment you all staff in impact first second overall of they’re in bps that what add other bps, about margin to down second so upside about be second the place in in bps a we’ll starting of again, as second up annualize half second When was half the bps get we

I’d I So market we’re our that’s sort parts we one agile shape to of always there’s the lots caveat, as our moving the in of way course, and mean is response thing adapt of through. very of the navigate we and it.

reasonably change, we’re So that margin but the we’ve that guidance we shape can year deliver full can pretty confident given.

Credit Matthew Suisse. from goes question next of Our Walker

I’ve got that’s if okay. X questions,

about inflation. to price the First offset talked is that you rises on

for X% say. the presentation, in should roughly rises get some that’s us I you’ve been sort from of X% mentioned suggests them. rises, accepting X% then you update said for there clients who are X% I increases we’ve the a that you’ve able to rise, past client think because roughly to through price maybe Maybe talked, -- to I X/X think benefit to guess could increase of the X% price I or price You And in base. when X% a the

accepted So maybe rise the clients expanded. a who’ve of percentage has

So maybe a you bit. could little to talk that

a The seems on thinking that to us that because maybe reacting market just But Maybe for -- -- allow maybe up the That let’s was double-digit a business a areas I of I XXXX. uncertainty business. skeptical I’m second the transformation the be provide or coming say, long that know, for making well around not growth, XX% in the you have way question on little it a other you will your John, but don’t increase from obviously, transformation. flat now, X% percentage update was could sort ‘XX. of to would which to

for the And tell talk and cautious moment. and any could do acquisition sort EBITDA on what acquisitions just the the the well the you you half? big not Well, business net maintaining that be through maybe percentage to then to finally, transformation sort at acquisitions? an at grow us Can how us you year? your little but So in of on a that the moment. are, might what to buyback. large you of is look Obviously, full us expect give you average anticipate your update what second spending debt And in

I’ll... Maybe

that. see When the acquisitions I if you can? more I to anticipate spending X price We month transformation can talk we’ll we large [indiscernible] them. say ones John, rise tackle and than than impacts them, There’s anticipate price what stuff, acquisitions, the today. together. happens you more first, the much mean doing we any on But what think doing about didn’t

Sure.

open keep in powder buybacks. -- then plan do XXX has Look, to point, first XXX in first again, to point well, likely our in We year. We think open. But and around the We’ve our clearly would if And options for transformation. more buyback look we’ll for Mark M&A do very We we and keep We’ll we I the M&A. options I as maybe point. to half. dry could said, half. on buyback, the opportunities. XXX the XXX imagine. could So done we always [NFT] down the alluded do price QX, that second did in the at that our at keep

But maybe debt if mean, year-end acquisitions. relation where parts net to be speaking, with our at something the range. broadly billion, of get debt of maybe of that I In year expect referred that we’ve terms to you GBP that we exit if X.Xx, to its to regards with M&A here and that EBITDA, apply the a order; lot a net least ought guidance what X.X obviously the But and apply to of course, the to not bottom of nature debt-to-EBITDA you X.X, X.X to can of position of by which given, there’s we’ll the get moving for relation in be where billion, already accepting our X.XXx about from would net CapEx, guidance GBP the a of lumpy. in a fact, we’d year, M&A, we’ve full to then X.X end to to a

we I so an driven your our is And flow-through. clients, right. X/X price increases I that. we yes, rises, think X% seen to be think sort by partly roughly of of we’ve average that about point, about your therefore, probably talk obviously X% When And math be X.X% probably to to will On And right. X%. price

we’ve you when increases can’t if to X/X so it still X/X-X/X-X/X. X/X managed roughly negotiate space under after. go effectively this to nature, maybe through sometimes are push in split we price just X/X probably through. think I contractual there’s

can’t to see achieved won’t we’ve increases are in clients able clients largely concerted further a half, have it increases But more the on on in it’s half. in do, price first unwind, through to Until over price price contractually we through to through. where So upside be years. push so period there come all there a is we little effort We fixed half. bit on what building will see to a because those of we increases second push some work expect second the contracts the

call on transformation, I sort -- was not trying candid sort not out largely of on mean at business, to question. to think it figure best own I If how you if maybe yes, our and of it’s We as be think people to what your definition. the answer would -- its is, about commerce that’s look way look at I experience, to technology transformation.

experiences, that’s business. our technology implementing our platforms, You’re building XX% of e-commerce for we they’re of -- solutions over creating That’s XX% the -- clients. And to half of XX% our said about of just our half over GIAs.

So to about business. of of XX% sort of is our XX% XX% XX%

of at So if you wouldn’t to XX% were the just think far that as I you wrong. be look business,

that Now to think anything is in don’t I the blunt. world recession-proof? is recession-proof, be

reason the of So And hold. uncertain big said will we continue these that we invest Yes some multiyear clients I our put of it is think what through some have -- In right. future yes, that, other projects a programs, some uncertain. them area because the And happens. persist, on multiyear I think -- cases, to that program, clients the and it’s to extent will grow. are that will is in that’s are that clients will

to a think -- I But that I business in rely that. wouldn’t that us I put area, a want -- it’s in think I good and position. wouldn’t I we on that don’t have that So good does significant

about that’s to think what I really. it we’ve is think our different that peers. And at not look said I’d -- what think from I is way the I think

that I last guess over said equal, I mean of areas, -- They being higher-growth our And of line mean these else X%. the it obviously, sort make increase in I that just an the XX% going probably volatility helps. of in it’s But at -- in would that’s in completely business happen business cycle. which probably ourselves top the encouraging. make direction, by sectors. GIAs under Mark’s we’ve case cycle against seen point, likely quicker, protects move the the XX%. protects all in areas we half-on-half growth. top higher-growth these the is higher-growth protect then every we every incremental But to so work piece we’re line to shift driven doing into across to we’re these potential the can’t

price been one the just example to an rises. Maybe is which has of in briefly, follow-up a very brand investing someone Unilever building support

you of look terms base If think taking client wait-and-see in what of And sort do in mode? of percentage think across percentage you you are that what your of -- by clients your do attitude? more are revenue, clients

think I seen came the Well, I FMCG uncertain relatively as -- desire continue to we sort it to major and to desire CPG soft I of helpful, I that because then the say is reason is situation, of going transcripts well. that tougher invest much think think what happens. we’ll, actually, they build technology people cycles, and say, were list to that strong and don’t if called you the have a And to think of I breadth I to Pfizer, greater clients, using to compared invested it’s that depth all that in I stronger actually that through our will marketing. look what category; category, I said. immune But well. point important to of investment benefit from Google, And commentary, the do across it And have the as -- pandemic, have think at the and I to and time. through. landing, of a the see we and person, if if companies think, tell we’re invest. that analysts be And Mondelez, continuing to think uncertain not we’ll I think a And so brand recognized previous think because what we the known that I Microsoft; for pinch And say, or I’d regretting, you think a during ZBB that. a for positive uncertain to a the reduction Coca-Cola, this [XXXX] and those think position, look in with was I CEO heard the them, of cost we of well clients we’re we But out saying those for company XXXX cycle Unilever, that’s let’s overfocused out. if to other earnings mean I at consistently I it but L’Oréal, in I wanted in not if I why P&G, the of they it’s on companies, characterize either. marketing, just pharma, continue won’t. (sic) read if think to danger brands the ourselves it week, the think clients building through value the appreciation their had at that’s relatively perhaps But they’re companies a come of back spend, they’ve marketing a think talk expense much continue have correct coming is and were I -- and sort also it’s I I they a in the

that So the understand I one material in clients think difference. that do

I made multiyear products, is second to to some like the engage digital the the need commerce, point invest transformation. difference of projects, material think you these areas in about need the in transformation,

in past. where think we I the from different that’s were very

sales. driving I to easier sales, of importance clients media let’s let’s it’s say, ROI. data much building to mean brand the I drive into think for just clients shift be And money using, retail honest, the ability, a for from and

they in times cut And tough, not you see invest are ROI. see sales, -- so just to drive might marketing can’t it’s more it because clients when the

I to So money. clients think invest ROI better would more need

economic be these resilient we to been we are previous that than the more reasons a in believe future I cycle. think have might all in economic cycle

you demonstrate quickly short-term mean think example, able very about I external to if and about we changes. agility, sort think COVID, first through we -- think how market I just can for to were foremost, respond of

good very looking forward. We’re at

freelances, our into We’re terms and very indexing cetera. et agile good of base at cost hirings, in adapting

Business is from manage structural X is years sheet. We’ve from together ago. ability terms business restructured. throw X good the We’ve to positioned going balance the we’re business a simpler. were being stronger cost got agencies. cost-saving a forward we our business I much opportunities Mark’s got we’ve of to from digital And a perspective, and or We’ve a cycle So well our The whatever creative at back very got brought in think continued then office. long-term point, perspective, just us. may where

facing We’re more highlighted attractive of and pivoting areas experience into and sectors, more into the beginning, at as technology. we and high-growth the commerce

I XX but into in So that. to uncertain -- only certain facing the environment a we think it’s think -- always face that’s business into next months, feel very I we’re well positioned

And Nollen a have follow-up Instructions] [Operator Macquarie. we from Tim question of

London this this share It’s result dry mind One on call very came I’ve boring, morning. the modeling you know afraid question, line. a about the with more. in I’m if got I wouldn’t of helping me something, associates up And John.

was were pretty a number you that down headline think I sharply. basis, on saying I think,

should at our then of that? to just related were used Kantar. on I for that that maybe this that, basically model? this on and think you in year be numbers remainder line call the elaborate what higher was expense year next saying the morning And Could interest you for

more in Yes. down Kantar, Look, on to But the by think year-on-year. between the order, more I to it a bring full primarily said, -- XX, work the to down costs. a obviously answer interest number numerator reverse of I year, consequence clearly of I’d as is, is which acquisition question debt, as for I XX on think

And the year-end. does from is between and business XX associate well. lower, a performance doing will numbers underlying the reflective overall Kantar perspective of I somewhere so has the that line and not mechanically incredibly of business. meant an mean it’s associates the line That of sort -- that has for said, but come that be down, But as XX the it

next level. And we’re a to normal Okay. for more year, back

think I we to that XX year? number back or number [same] was that so next year. last Are

else But all it’s that. just I’m next normalize this giving into around guidance level. by about guess that very driven mean events in being simply I equal, we’ve evidenced year effectively I year, changed as it might because cautious events.

I at Tim, So right give want dry powder specific I more be the my just there, to think, guidance time. and honest, we to can keep

All right. Yes. No, ‘XX I to hold didn’t mean to a guidance. you

sure want Just to the I think it to I last year make versus year. this got XX just right. to make numbers sure I’ve XX XX, was

Yes.

We no currently have questions. further

the to closing hand call for any Mark remarks. So I’ll back over

Very good.

Thanks So everybody. for questions. thank you, your

Just make. one final comment to

hour. all in thank you he Peregrine end the we last for years bows listening. contribution and the call, As X thank out And next his the X.X for over

been I to well. got half the think year. in do as to a start second the good And we’ve work it’s

everybody. We’ll the thanks, call see you before. or on So next