NEW YORK & LONDON--(BUSINESS WIRE)--Sep 4, 2018--WPP (NYSE: WPP) today reported its 2018 Interim Results.

Mark Read, Chief Executive Officer, WPP, stated:

“The second quarter of 2018 was WPP’s first quarter of like-for-like growth since Q1 2017, and the company has performed strongly in terms of winning and retaining business over the period.

“At our first quarter trading update we said there was no standing still, and in the last few months we have made progress in a number of important areas.

“We have focused our efforts on providing more effectively integrated solutions to clients and, in competitive pitches, we have won or grown business with clients including Adidas, Hilton, Mars, Mondelez, Shell and T-Mobile.

“We have looked at our offering and begun to focus our portfolio through 15 disposals and divestments, including Globant and AppNexus, generating cash proceeds of £676 million so far this year, which will also strengthen our balance sheet and improve our average net debt to EBITDA ratio.

“And we have accelerated initiatives that will simplify our organisation, making it easier for us to manage and clients to access, with, for example, co-locations opened or announced in New York, Kuala Lumpur, Prague and Toronto.

“The mix of performance by geography and function and a decision to invest in the growing areas of our business resulted in a slightly lower headline PBIT margin.

“As Chief Executive, my focus will be on invigorating our company and returning the business to stronger, sustainable growth. Our review of strategy is underway, addressing our structure, our underperforming operations, particularly in the United States, and how we position the company for the future. We will provide an update by the year end.”


Reported revenue down 2.1% at £7.493 billion, impacted by currency headwinds of 5.0%. Constant currency revenue up 2.9%, like-for-like revenue up 1.6% (Q2 up 2.4%) Constant currency revenue less pass-through costs up 1.4%, like-for-like revenue less pass-through costs up 0.3% (Q2 up 0.7%) Headline profit before interest and tax £821 million down 7.0%, down 2.3% in constant currency Headline PBIT margin 13.3% down 0.5 margin points reportable and constant currency, down 0.4 margin points like-for-like Headline profit before tax £735 million down 7.4%, down 2.5% in constant currency Profit before tax £846 million up 8.6%, up 14.2% in constant currency primarily reflecting net exceptional gains Profit after tax £705 million up 11.3%, up 16.8% in constant currency Headline diluted earnings per share 42.6p down 6.2%, down 1.3% in constant currency Diluted earnings per share 53.4p up 14.6%, up 20.3% in constant currency Dividends per share 22.7p flat with 2017 Share buy-backs of £201 million, equivalent to 1.3% of the issued share capital

In this press release not all of the figures and ratios used are readily available from the unaudited interim results included in Appendix 1. These non-GAAP measures, including constant currency and like-for-like growth, revenue less pass-through costs and headline profit measures, management believes are both useful and necessary to better understand the Group’s results. Where required, details of how these have been arrived at are shown in the Appendices.

Key figures

Reported billings were down 1.0% at £26.656 billion, but up 4.1% in constant currency. Estimated net new business billings of $3.2 billion were won in the first half of the year, a return to a strong performance. The Group won new assignments from Adidas, Hilton, Mondelez, Office Depot and T-Mobile and expanded its relationships including Danone, Mars and Shell.

Reported revenue was down 2.1% at £7.493 billion. Revenue on a constant currency basis was up 2.9% compared with last year, the difference to the reported number reflecting the strengthening of the pound sterling in the first half, primarily against the US dollar. On a like-for-like basis, which excludes the impact of acquisitions and currency, revenue was up 2.4% in the second quarter, a significant improvement compared with the first quarter growth of 0.8%, giving 1.6% for the first half.

Revenue less pass-through costs was up 1.4% in the first half, on a constant currency basis, and up 0.3% like-for-like, again a significant improvement on the first quarter growth of 1.0% and -0.1% respectively. In the second quarter, like-for-like revenue less pass-through costs was up 0.7%, the first quarter of growth since the first quarter of 2017, following -0.1% in the first quarter, giving 0.3% for the first half.

Operating profitability

Headline EBITDA was down 6.7% to £948 million, down 1.9% in constant currency. Headline PBIT before income from associates was £783 million, down 6.3%, down 1.6% or £13 million in constant currency. Headline PBIT was down 7.0% to £821 million from £882 million, down 2.3% or £20 million in constant currency.

Headline PBIT margin was down 0.5 margin points at 13.3%, down 0.5 margin points in constant currency, and down 0.4 margin points on a like-for-like basis. On the same basis, excluding all incentives, margins were down 0.2 margin points, with staff costs excluding incentives favourable 0.2 margin points and property and other operating costs worse by 0.4 margin points. In part this reflects continued focus on salary and freelance costs through control of staff numbers, with like-for-like average headcount, down 1.7% compared with the increase in like-for-like revenue less pass-through costs of 0.3%. In the first half, incentive costs amounted to £115.7 million or 12.9% of headline PBIT before incentives and income from associates, compared to £104.4 million or 11.1% last year, an increase of £11.3 million or 10.8%.

Exceptional gains and investment write-downs

In the first half of 2018, the Group generated exceptional gains of £188.5 million, primarily relating to the gain on the sale of the Group’s investment in Globant S.A. These were partly offset by the Group’s share of associate company exceptional losses of £28.4 million and restructuring costs of £45.5 million, the majority of which comprise severance costs arising from the continuing structural assessment of parts of the Group’s operations. This gives a net exceptional gain of £114.6 million. This compares with exceptional gains in the first half of 2017 of £18.9 million, relating primarily to the Group’s share of associate company exceptional gains, offset by restructuring costs of £19.2 million, giving a net exceptional loss of £0.3 million.

Interest and taxes

Net finance costs (excluding the revaluation of financial instruments) were £85.9 million compared to £88.6 million in the first half of 2017, a decrease of £2.7 million, or 3.0%, reflecting foreign exchange and higher levels of average net debt, more than offset by lower funding costs and more efficient management of cash pooling.

The headline tax rate rose by 0.5% to 22.5% (2017: 22.0%), reflecting the levels and mix of profits in the countries in which the Group operates. The tax rate on the reported profit before tax was 16.7% (2017: 18.7%), lower than the headline tax rate, due to the revaluation of financial instruments, and gains on disposal of investments and subsidiaries not being taxable.

Earnings and dividend

Headline profit before tax was down 7.4% to £735 million from £793 million and down 2.5% in constant currency.

Reported profit before tax rose by 8.6% to £846 million from £779 million, or up 14.2% in constant currency. This reflected the significant difference between the net exceptional gains in the first half of 2018 compared with the small net exceptional loss in the first half of last year. Reported profits attributable to share owners rose by 12.8% to £672 million from £596 million, again reflecting the impact of exceptional items in 2018. In constant currency, profits attributable to share owners rose by 18.4%.

Diluted headline earnings per share fell by 6.2% to 42.6p from 45.4p. In constant currency, diluted headline earnings per share fell by 1.3%. Diluted reported earnings per share rose by 14.6% to 53.4p from 46.6p and by 20.3% in constant currency, as a result of the net exceptional gains in the first half of 2018 compared with the first half of 2017.

Given the first half results, your Board considers it appropriate to declare an interim dividend of 22.7p per share, the same as last year, a pay-out ratio of 53%. The record date for the interim dividend is 5 October 2018, payable on 5 November 2018. Further details of WPP’s financial performance are provided in Appendices 1 and 2.

Revenue analysis

Revenue less pass-through costs analysis

Regional review Revenue analysis Second quarter

First half

Revenue less pass-through costs analysis Second quarter

First half

This article has been truncated. You can see the rest of this article by visiting