WPP revenues rise 10% in third quarter; GroupM, Hogarth Ogilvy and AKQA saw strong growth

WPP – parent company of the Ogilvy, Grey and GroupM agencies – said its clients are investing in their brands despite economic uncertainty, as it released its Q3 earnings overnight (AEDT). 

While wage inflation and lockdowns in China tempered profits growth in the third quarter, revenues had increased 10.3% in Q3 to £3.57 billion (AU$6.39 billion), or 2.7% on a like-for-like basis, after winning $1.7 billion (AU$3.04 billion) in net new business throughout the period. Year-to-date revenues were up 10.2% at £10.32 billion (AU$18.48 billion).

WPP chief executive Mark Read said: “WPP continues to show strong momentum, reflecting broad-based growth across our agencies, markets and industry sectors and the investment by our clients in marketing, e-commerce and digital transformation. Our performance on a three-year basis has continued to improve each quarter during 2022.

“Our new business success reflects the quality of our creative work, our strength in media and our ability to deliver integrated solutions to clients. During the quarter we achieved $1.7 billion (AU$2.62 billion) of net new business, including assignments with Nestle, Samsung and SC Johnson. Our leading scale and differentiated offer were exemplified by GroupM which led COMvergence’s new business and retention global rankings in the first half of 2022.

“Our growth over the year has been strong with full-year like-for-like revenue less pass-through costs now upgraded to 6.5-7.0%. We have continued to invest in our people and in data and technology to support this growth, resulting in headline operating margin now expected to be up 30 to 50 bps. We are on track with the £300 million ($537 million) transformation savings and will continue to manage our costs with discipline.

“We enter the last quarter of the year with confidence, based on the leading competitive position of our businesses, our client momentum, and the knowledge that the actions we have taken to strengthen WPP leave us well-placed to support our clients in navigating the economic uncertainties ahead.”

WPP won $5.1 billion (AU$7.85 billion) of net new business in the first nine months of the year, up on the $4.6 billion (AU$7.08 billion) in the same period in 2021. Significant wins and retentions include Nestlé Germany media, Samsung European CRM, Discover media, H&R Block creative and the consolidation of SC Johnson’s global creative and shopper marketing account. Coca-Cola continues to be onboarded at pace; most recently, Coca-Cola-owned Costa Coffee appointed OpenX from WPP to lead its global brand strategy.

Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe like-for-like revenue less pass-through costs were up 6.9%. The highest growth region was Latin America, led by Brazil which grew 19.7%, the sixth consecutive quarter of double-digit growth. Asia Pacific grew more slowly with strong growth in India, up 10.7% offset by a significant slowdown in China. China was down 9.0% in the third quarter, a deceleration from the second quarter, as Covid-related lockdowns have restricted activity.

GroupM, which was approximately 37% of WPP revenue less pass-through costs in the third quarter, grew 4.7% in Q3 and showed an improving three-year trend from 15.9% in Q2 to 20.0% in Q3. Excluding GroupM, Global Integrated Agencies was up 4.0%. Hogarth was the standout performer in the quarter, while Ogilvy and AKQA also saw strong growth.

WPP currently trades at £750.20 (A$1343) as of 21 October 2022 and has a market capitalisation of £8.14 billion (A$14.57 billion).


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