WPP share price fell more than 7% this morning despite upgrading its forecast for how the agency group expects to perform for the year.
The owner of MediaCom and Mindshare upgraded its full-year guidance for 2022 again after “broad-based growth” and “sustained demand” from clients across segments and regions in the first half of 2022, but this fell short of investors’ expectations in comparison to other holding group’s results last week.
WPP predicted organic growth of 6%-7%, compared to previous expectations of 5.5%- 6.5%.
Revenue for H1 2022 was £6.8bn, compared to £6.1bn in H1 2021, meaning H1 revenue was up 10.2% and like-for-like revenue was up 8.7%.
H1 revenue less pass-through costs (fees from suppliers that are billed to clients) were up 12.5%. This compared to 8.9% growth for the same period last year.
This meant like-for-like revenue less pass-through costs, WPP’s preferred measure of organic revenue, was 8.3% for the second quarter of this year. The company grew in all regions, apart from in China which was affected by lockdowns. The US grew by 10.4%, UK at 6.2%, Germany 11.5%, China -6.1% and Australia 3.2%.
WPP said client demand stayed “healthy across all services” and highlighted higher-growth areas such as experience, commerce and technology which made up 39% of Global Integrated Agencies, excluding GroupM, in contrast to 35% in 2019.
The report said it had seen “good growth” in technology, consumer packaged goods, and healthcare and pharma sectors which together represented 54% of revenue less pass-through costs.
Travel and leisure revenue still remained below 2019 levels but is still rebounding from the pandemic with 23% growth in the first half of this year, and WPP noted some “softness” in the automotive sector due to ongoing chip shortages.
WPP also registered $3.4bn net new business billings in the first half of this year, compared to $2.9bn in the first half of 2021. Key wins included Audi, Audible, Danone, Mars and Nationwide. The report noted Coca-Cola had been onboarded “at pace”.
Mark Read, CEO of WPP, said: “We have enjoyed a strong first half, with broad-based growth across our creative, media and public relations businesses. This reflects the improved competitive position of our creative businesses, with their growing capabilities in commerce, experience and technology, our continued strength in media and the resurgence in demand for strategic communications advice from our public relations agencies.”
Looking forward at outlook for the overall market, WPP’s media investment arm, GroupM, now anticipates global advertising to grow by 8.4%, minus US political advertising, in 2022, marginally lower than the 9.7% predicted in December 2021 because of a “softer outlook” for China as it has continued lockdowns.
GroupM also predicted 12% growth in digital advertising revenues in 2022, a slowdown from 32% growth in 2021. The report said digital advertising on pure-play platforms represented 67% of total advertising revenue.
