WPP records strong growth of 15.7% in third-quarter results

Holding company WPP has released its earnings figures for the third quarter of 2021, revealing a strong period of growth compared to 2020 and 2019.

What do the results show?

  • Net revenue for Q3 was £2.6bn, an increase of 9.9% on the previous quarter and 17.7.% on the same period last year.

  • That represents 6.9% organic growth against the same period for 2019.

  • WPP’s margin on its Q3 net revenue was 14%, an marginal increase on the previous 13.5%.

  • During this year-to-date, net revenue totals £7.53bn, an increase of 12.6% on 2019.

  • The company has raised its 2021 guidance again, and now predicts operating margins to hold at 14%, and full year net revenue to increase 12%. Net debt has been cut £1bn, to £1.6bn.

  • Major acquisitions in recent months include the merger between Finsbury Glover Hering and Sard Verbinnen, and the purchase of AI firm Satalia in August.

  • Mark Read, chief executive officer of WPP, said: “Our very strong performance goes well beyond a cyclical recovery, with like-for-like growth over 2019 at 6.9% in the quarter. Clients across all sectors and geographies are making significant investments in marketing, particularly in digital media and e-commerce services. We are now above 2019 levels in all of our business lines, and with the actions we have taken over the last three years, we are even better positioned for growth.”

  • The results have been received well by UK industry observers. Chris Daly, chief executive at the Chartered Institute of Marketing, said: “While ongoing disruptions in global supply chains have clouded the outlook for the advertising industry, WPP’s positive results provide gentle assurance that delays are having little financial impact on the world’s largest communications group.

  • ”WPP’s forward-looking, customer-centric perspective looks set to assist their clients’ financial recoveries, highlighting the value of marketing while also developing richer, more innovative commerce solutions for their customers.”

  • Speaking to investors, though, Read did note that WPP's creative workhorses Ogilvy and Wunderman Thompson still lagged against their 2019 performance. It was announced yesterday that Ogilvy lost its account with British Airways, held for the last for years, to rival Uncommon.

Which regions and areas of the business performed best?

  • While WPP’s core UK and US markets saw growth of 12.4% and 16.9%, other markets saw considerable increases. Germany saw growth of almost 35% and China 18% in the quarter.

  • WPP bagged $1.7bn of new business in Q3, accounting for $4.6bn in 2021 overall. Wins include Beiersdorf, L’Oréal, Sainsbury’s and TD Bank.

  • The network’s performance was led by GroupM, which accounted for 37% of WPP revenue, and VMLY&R. WPP’s PR and specialist divisions also performed well, with net revenue from the latter cluster of agencies up 41.5% on 2020 and 21.8% on 2019.

  • Read said: “Our reshaped offer – which combines creativity with technology and data, through Choreograph, with the largest global media platform in GroupM – is proving its value for existing and new clients. This is reflected in the continuation of our longstanding and successful partnership with Unilever, and the growth of our relationship with Bayer. In addition, we are delighted to have won new assignments with Beiersdorf, L’Oréal, Sainsbury’s and TD Bank.“

  • The work of restructuring WPP, begun when Read took over in 2018, continues. ”There is definitively momentum within the business,” chief financial officer John Rogers said.

  • Rogers told investors the company had plans to further eliminate inefficiencies within GroupM, and that it had made strong progress trimming the sails of creative agencies around the globe.

  • Despite WPP's big clients working in the CPG and manufacturing spaces, the company hasn’t seen any splashback from supply chain issues. ”We haven’t seen an impact from supply chain disruption in our numbers,” Read told investors.

  • Although Snap reported a big hit following Apple’s latest data tracking changes, Read said WPP hadn’t seen any ill effects from the change.