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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)
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