Describing 2023 as “more challenging” than expected WPP has released preliminary results for 2023, reporting only slight gains in revenue.
The advertising giant reported like-for-like growth of 0.9% and revenue was reported at £14.845 billion, up 2.9 percent on the previous year, while reported operating profit plunged 60.9 percent down to £531 million.
The US, far and away WPP’s largest market, dropped by 4.5 percent on lower spending by the company’s tech, healthcare, and retail clients.
“While 2023 was more challenging than we expected due to cuts in spending by technology clients, we delivered a resilient performance for the year,” said Mark Read, CEO of WPP.
“This was driven by disciplined cost control, while continuing to invest in AI, data and technology.”
AI will be fundamental
Read said that the focus on AI will continue to be a strong focus for the company.
“AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients,” said Read.
“Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients.
In 2023, WPP sought to streamline costs through the creation of merged brands including the combining of Essence and Mediacom into EssenceMediacom and VMLY&R and Wunderman Thompson to VML.
And WPP recently announced the merger of PR brands Hill & Knowlton and BCW Global.
WPP full year and Q4 Highlights 2023
- FY reported revenue +2.9%, LFL revenue +3.2%
- FY revenue less pass-through costs +0.5%, LFL revenue less pass-through costs +0.9%
- Q4 LFL revenue less pass-through costs +0.3% with ex-US4 +3.1% benefiting from strong growth in the UK and India partially offset by declines in Germany and China. US Q4 LFL decline of 4.5% primarily due to lower spend by technology, healthcare and retail clients, partially offset by growth in CPG, telecoms and automotive sectors
- Global Integrated Agencies FY LFL revenue less pass-through costs +1.3% (Q4: +0.7%): within which GroupM, our media planning and buying business, grew +4.9% (Q4: +5.7%), partially offset by a 1.6% decline in other Global Integrated Agencies (Q4: -3.4%)
- Solid new business performance: $4.5bn net new billings5 (2022: $5.9bn) with Q4 net new billings $1.1bn (Q4 2022: $0.8bn). The current pipeline of potential new business remains higher year-on-year
- FY headline operating profit margin in line with original guidance6 of 15.0% (excluding the impact of FX). Headline operating profit margin of 14.8% (2022: 14.8%) reflecting a 0.2pt drag from FX, disciplined cost control and continued investment in our technology, data and AI offer
Looking ahead WPP gave 2024 guidance of LFL revenue less pass-through costs growth of 0-1%, with improvement in headline operating profit margin of 20-40bps.
“We are optimistic about the strategic opportunities ahead of us and are confident that we can deliver accelerated and increasingly profitable growth over the medium term,” said Read.
