WPP 2017 First Quarter Trading Update

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• Reported billings up 9.2% at £13.017 billion
• Reported revenue up 16.9% at £3.597 billion, up 1.2% at $4.457 billion, up 4.9% at €4.183 billion and down 0.2% to ¥506 billion
• Constant currency revenue up 3.6%, like-for-like revenue up 0.2%
• Constant currency net sales up 4.8%, like-for-like net sales up 0.8%
• First quarter revenue, net sales and operating profit well above budget and ahead of last year
• Share buy-backs of £180 million, representing 10.0 million shares or 0.8% of the issued share capital purchased in first quarter
• Constant currency net debt at 31 March 2017 up £474 million on same date in 2016, with average net debt in first quarter of 2017 up by £453 million over same period in 2016, reflecting strong acquisition activity, including debt acquired on the merger with STW of approximately £150 million and share buy-backs
• Resumption of net new business momentum, with first or second position in all net new business tables year to date

Quarter 1 highlights

• Revenue growth of 16.9%, with constant currency growth of 3.6%, like-for-like growth of 0.2%, 3.4% growth from acquisitions and 13.3% from currency, primarily reflecting the weakness of sterling against the US dollar, the euro and other major currencies
• Net sales growth of 18.5% in sterling (up 2.6% in dollars, up 6.3% in euros and down 1.1% in yen), with constant currency growth of 4.8%, like-for-like growth of 0.8%, 4.0% growth from acquisitions and 13.7% from currency
• Like-for-like revenue growth in all regions and business sectors, except North America and data investment management, characterised by particularly strong growth geographically in the United Kingdom, Western Continental Europe, Latin America and Central & Eastern Europe and functionally in public relations and public affairs and sub-sector digital, eCommerce & shopper marketing – the renamed direct, digital and interactive sub-sector
• Like-for-like net sales growth of 0.8%, with all regions and sectors, except North America and data investment management, showing growth. The delta compared to revenue growth reversing, as it did in the second half of 2016, as the Group’s investment in technology enhanced the growth of advertising and media investment management net sales and as data investment management direct costs have been reduced
• Constant currency average net debt in the first quarter increased by £453 million to £4.544 billion compared to the same period in 2016. This continued to reflect significant net acquisition spend and dividends of £1.320 billion in the twelve months to 31 March 2017, and the impact of the debt acquired on the merger with STW in Australia of approximately £150 million, more than offsetting the improvements in working capital seen in the second half of last year and first quarter of this year
• Net new business of $2.103 billion in the first quarter, compared to $1.779 billion in the first quarter last year, with the Group first or second in net new business league tables year to date

Current trading and outlook

• FY 2017 quarter 1 preliminary revised forecasts | Similar to budget, with like-for-like revenue and net sales growth of around 2%, with the second half stronger reflecting weaker comparatives and a headline net sales margin target of 0.3 margin points improvement on a constant currency basis
• Dual focus in 2017 | 1. Revenue and net sales growth from leading position in horizontality, faster growing geographic markets and digital, premier parent company creative and effectiveness position, new business and strategically targeted acquisitions; 2. Continued emphasis on balancing revenue growth with headcount increases and improvement in staff costs/net sales ratio to enhance operating margins
• Long-term targets | Above industry revenue growth, due to effective implementation of horizontality, geographically superior position in new markets and functional strength in new media, data investment management, including data analytics and the application of new technology, creativity and effectiveness; improvement in staff costs/net sales ratio of 0.2 or more depending on net sales growth; net sales operating margin expansion of 0.3 margin points or more on a constant currency basis, with an ultimate goal of almost 20%; and headline diluted EPS growth of 10% to 15% p.a. from revenue and net sales growth, margin expansion, strategically targeted small- and medium-sized acquisitions and share buy-backs

Download full WPP 2017 First Quarter Trading Update (pdf)



For further information:
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Lisa Hau             } +44 20 7408 2204
Feona McEwan   }
Chris Wade        }

Kevin McCormack }
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Juliana Yeh            +852 2280 3790

<sub>This announcement has been filed at the Company Announcements Office of the London Stock Exchange and is being distributed to all owners of Ordinary shares and American Depository Receipts. Copies are available to the public at the Company’s registered office.

The following cautionary statement is included for safe harbour purposes in connection with the Private Securities Litigation Reform Act of 1995 introduced in the United States of America. This announcement may contain forward-looking statements within the meaning of the US federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially including adjustments arising from the annual audit by management and the Company’s independent auditors. For further information on factors which could impact the Company and the statements contained herein, please refer to public filings by the Company with the Securities and Exchange Commission. The statements in this announcement should be considered in light of these risks and uncertainties.</sub>