REG - WPP PLC - First Half 2025 Trading Update

WPPAnnouncement

Wed 07:00

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RNS Number : 2594Q  WPP PLC  09 July 2025

 
9 July 2025

First Half 2025 Trading Update

 

 Rebasing FY guidance on tougher macro and weaker new business performance

 

WPP is updating the market today on H1 trading and the FY 2025 outlook.
Against a challenging economic backdrop, we have seen a deterioration in
performance as Q2 has progressed. We now anticipate H1 like-for-like (LFL(1))
revenue less pass-through costs to decline by -4.2% to -4.5%, with a decline
of -5.5% to -6.0% in Q2 which, although impacted by one-off factors, is below
our expectations. We expect the lower revenue less pass-through costs, coupled
with severance action at WPP Media, to result in H1 headline operating
profit(2) in the range of £400m to £425m, which is consistent with a margin
decline of 280 to 330 bps year-on-year (excluding FX).

 

With the expectation of continued macro uncertainty weighing on client spend
and weaker net new business than originally anticipated, we are reducing our
guidance for 2025 LFL revenue less pass-through costs to -3% to -5% and now
expect a year-on-year decline in headline operating profit margin of 50 to 175
bps (excluding FX) reflecting benefits from continued action on costs.

 

Mark Read, Chief Executive Officer of WPP, said:

 

"Since the start of the year, we have faced a challenging trading environment
with macro pressures intensifying and lower net new business. While we
expected the second quarter to be similar to the first quarter, performance in
June was worse than anticipated and we expect this pattern of trading in the
first half to continue into the second half.

 

"As a result, we are updating our guidance for the full year and reducing our
expectations on LFL revenue less pass-through costs growth to -3% to -5% (from
flat to -2%) with a year-on-year decline in headline operating profit margin
of 50 to 175 bps (vs. around flat previously).

"Our focus remains on ensuring the right balance between investing in the
business for the long-term and continuing to reduce structural costs, while
taking appropriate actions to respond to the current trading environment."

 

Conference Call at 7.30am UK/2.30am EDT:

 

Dial-in Details: UK +44 (0) 20 3936 2999; US +1 646 233 4753; Passcode: 522518

Replay: Webcast replay and transcript will be available as soon as possible
here
(https://www.wpp.com/en/investors/results-presentations-and-reports?page=1)

 

 

 

(1.) Like-for-like. LFL comparisons are calculated as follows: current year,
constant currency actual results (which include acquisitions from the relevant
date of completion) are compared with prior year, constant currency actual
results, adjusted to include the results of acquisitions and disposals for the
commensurate period in the prior year.

(2.) Management believes these non-GAAP measures, including like-for-like,
revenue less pass-through costs and headline profit measures, are both useful
and necessary to better understand the Group's results. Details of how these
measures are calculated are detailed in the 2024 Preliminary Results RNS, 27
February 2025.

H1 2025 performance

 

•    H1 revenue less pass-through costs - We expect H1 revenue less
pass-through costs to be around £5.0bn, which is consistent with a LFL
decline of -4.2% to -4.5%. This implies a Q2 LFL decline in revenue less
pass-through costs of -5.5% to -6.0%.

 

•    Business segments and regions - We saw a quarter-on-quarter
deterioration in North America which we expect will be down low single digits
across H1. Other regions have remained weak despite an easing comparative. By
segment, Global Integrated Agencies has seen a step down from Q1 and is
expected to decline mid-single digits in H1, with lower client spend and net
new business impacting WPP Media and Ogilvy in particular.

 

•    Headline operating profit - The lower than expected revenue less
pass-through costs, coupled with the severance action at WPP Media, is
expected to result in headline operating profit in the range of £400m to
£425m for H1, consistent with a headline operating profit margin of 8.0% to
8.5%, down 280 to 330 bps year-on-year (excluding FX).

 

•    2025 Interim Results - WPP will report interim results on 7 August
2025.

 

Financial outlook for 2025

 

•    LFL revenue less pass-through costs - Our original guidance of flat
to -2% anticipated an improvement in the sequencing of net new business
through the year and some scope for deterioration in the macro environment.
With the macro environment weighing more heavily on client spending and less
support from net new business (including pull forward of losses originally
anticipated in 2026), we are updating our FY guidance for LFL revenue less
pass-through costs to -3% to -5%, consistent with limited improvement from H1.

 

•    Headline operating profit margin - We continue to take action on
costs, and expect these to deliver an improved margin in the second half. We
expect severance actions taken in the second quarter at WPP Media to have a
broadly neutral impact for the full year and generate £150m+ of annualised
gross costs savings. That said, with LFL revenue less pass-through costs
expected to be down more than our original guidance range, we believe there
will be a trade off between holding the full year margin and continuing to
make appropriate investment in the business. Reflecting this, we now assume a
decline in headline operating profit margin of 50 to 175 bps (excluding FX).

 

•    Additional guidance - We will update on other 2025 financial
indicators at our interim results in August.

 

This announcement contains information that constitutes as inside information.
The person responsible for arranging the release of this announcement on
behalf of WPP plc is Balbir Kelly-Bisla, Company Secretary.

 

 For further information:
 Media                                    Investors and analysts
 Chris Wade, WPP    +44 20 7282 4600      Thomas Singlehurst, CFA  +44 7876 431922
 Richard Oldworth,  +44 7710 130 634      Anthony Hamilton         +44 7464 532903
 Burson Buchanan    +44 20 7466 5000      Melissa Fung             +44 7353 107064

 press@wpp.com                            irteam@wpp.com           wpp.com/investors (file:///C%3A/Users/BC/Documents/WPP/wpp.com/investors)

 

Cautionary statement regarding forward-looking statements

 

 

This document contains statements that are, or may be deemed to be,
"forward-looking statements". Forward-looking statements give the Company's
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such, all forward-looking statements involve risk and uncertainty because they
relate to future events and circumstances that are beyond the control of the
Company. Actual results or outcomes may differ materially from those discussed
or implied in the forward-looking statements. Therefore, you should not rely
on such forward-looking statements, which speak only as of the date they are
made, as a prediction of actual results or otherwise. Important factors which
may cause actual results to differ include but are not limited to: the
unanticipated loss of a material client or key personnel; delays, suspensions
or reductions in client advertising budgets; shifts in industry rates of
compensation; regulatory compliance costs or litigation; changes in
competitive factors in the industries in which we operate and demand for our
products and services; changes in client advertising, marketing and corporate
communications requirements; our inability to realise the future anticipated
benefits of acquisitions; failure to realise our assumptions regarding
goodwill and indefinite lived intangible assets; natural disasters or acts of
terrorism; the Company's ability to attract new clients; the economic and
geopolitical impact of the conflicts in Ukraine and the Middle East; the risk
of global economic downturn; slower growth, increasing interest rates and high
and sustained inflation; supply chain issues affecting the distribution of our
clients' products; technological changes and risks to the security of IT and
operational infrastructure, systems, data and information resulting from
increased threat of cyber and other attacks; effectively managing the risks,
challenges and efficiencies presented by using Artificial Intelligence (AI)
and Generative AI technologies and partnerships in our business; risks related
to our environmental, social and governance goals and initiatives, including
impacts from regulators and other stakeholders, and the impact of factors
outside of our control on such goals and initiatives; the Company's exposure
to changes in the values of other major currencies (because a substantial
portion of its revenues are derived and costs incurred outside of the UK); and
the overall level of economic activity in the Company's major markets (which
varies depending on, among other things, regional, national and international
political and economic conditions and government regulations in the world's
advertising markets). In addition, you should consider the risks described in
Item 3D, captioned 'Risk Factors' in the Group's most recent Annual Report on
Form 20-F, which could also cause actual results to differ from
forward-looking information. Neither the Company, nor any of its directors,
officers or employees, provides any representation, assurance or guarantee
that the occurrence of any events anticipated, expressed or implied in any
forward-looking statements will actually occur. Accordingly, no assurance can
be given that any particular expectation will be met and investors are
cautioned not to place undue reliance on the forward-looking statements. Other
than in accordance with its legal or regulatory obligations (including under
the Market Abuse Regulation, the UK Listing Rules and the Disclosure and
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no obligation to update or revise any such forward-looking statements, whether
as a result of new information, future events or otherwise. Any
forward-looking statements made by or on behalf of the Group speak only as of
the date they are made and are based upon the knowledge and information
available to the Directors at the time.

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