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WPP doubled its bonus pool over the last two years, 2021 financial results show


By Sam Bradley | Senior Reporter

February 24, 2022 | 5 min read

British holding company WPP has released its preliminary full year results for 2021, revealing “an outstanding year“ according to chief executive Mark Read.

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WPP recorded its ‘fastest growth in 20 years’ according to boss Mark Read

The company, which counts agency networks such as VMLY&R, Ogilvy and GroupM among its subsidiaries, saw revenue growth of almost 3% compared with 2019, reflecting the recovery in client demand throughout 2021.

The results also revealed that the holding company doubled the size of its bonus pool, compared with 2019.

What do the results show?

Revenue less-pass-through costs (net revenue) in 2021 was £10.4bn ($13.9bn) – a like-for-like increase of 13.3% on 2020. Like-for-like revenue was 2.9% higher than its 2019 net revenue. Read said this represented WPP’s “fastest organic growth in 20 years“.

The fourth quarter of 2021 saw organic growth of 10.4% and 3.6% when compared with the same period in 2019.

WPP’s operating margin increased to a rate of 14.4%, up from 12.9% in 2020. Its EBITDA (earnings before interest, taxes, depreciation and amortization) rose 18.2%, giving the company an operating profit of £1.8bn ($2.4bn). Its closest rival Publicis Groupe recorded an operating profit of £1.91bn (€2.31bn, or $2.55bn) in the same period.

In a statement, Read said: “It has been an outstanding year for WPP. Our top-line growth, driven by strong demand for our services in digital marketing, media, e-commerce and technology, has resulted in our fastest organic growth for over 20 years. As a result, we are two years ahead of our plan, hitting our 2023 revenue target in 2021.“

“We have made substantial strategic progress, creating the world’s leading board-level communications firm through the merger of Finsbury Glover Hering and Sard Verbinnen, and acquiring capabilities in AI, commerce and technology services to leverage across all of WPP for future growth. Cash generation continues to be very strong, underpinned by efficiencies achieved in our transformation program, allowing us to make significant investments in our offer and reward our people for their huge contribution, while returning over £1bn in cash to shareholders through dividends and share buybacks.“

WPP made a number of major investments in the last year, including the founding of data firm Choreograph and the acquisition of Sard Verbinnen. And it has been paying its staff a lot of bonuses lately; it recorded £592m ($794m) in bonus payments over the course of the year, almost £300m more than in 2019. It now employs 109,000 staffers worldwide. But despite a share buyback, its cash flow improved in 2021, with a quarter of a billion out the door, compared to the £1bn spent in 2020.

The company’s long-term move to ’campuses’ rather than offices, as well as work-from-home regimes around the world, aided those efforts, with real estate costs down 17.1%. Net debt was down to £0.9bn ($1.2bn).

Which sectors and regions performed best?

In the US, revenue growth was led by GroupM, VMLY&R and Hogarth; revenue in the US was up 3.3% compared to 2019. In the UK, VMLY&R and AKQA led the pack, with organic growth at 15% in 2021 and 2.9% over the two year stack.

APAC and Latin America saw a mixed performance, with Australia hit particularly hard by Covid; Brazil, in comparison, saw a strong performance. Organic growth for both regions combined was 12.5% in 2021 and 2.6% over the two year stack.

Big clients are spending more and more on commerce, customer experience and digital transformation – GroupM’s commerce billings rose to 41%, while experience and commerce sales accounted for 38% of net revenue from WPP’s integrated agencies (excluding GroupM), up from 35% in 2019.

What next for WPP?

WPP expects to experience between 2% and 4% annual growth in 2023, with an operating margin of 15.5-16%.

It also suggested its share dividend could grow and said it plans to buy back £800m ($1.07bn) of its own shares in 2022.

Read concluded: ”We look forward to 2022 with confidence. We are guiding to strong top-line growth, improving profitability and continued investment in our people and services.”

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