WPP’s third-quarter trading update for 2024 shows continued steady progress despite some challenges in key markets like China. The company reported a like-for-like (LFL) revenue growth of 4.1% and a modest LFL growth of 0.5% in revenue less pass-through costs. The performance was driven by sectors such as consumer packaged goods (CPG), automotive, travel and leisure, and financial services. While the healthcare and retail sectors lagged due to previous client losses, WPP remains confident, reaffirming its guidance for the full year.
Revenue and revenue less pass-through costs
WPP reported a total revenue of £3,558 million for the third quarter of 2024. This represents a growth of 1.4% on a reported basis and 4.1% on a like-for-like (LFL) basis. Revenue less pass-through costs for Q3 amounted to £2,765 million, reflecting a 2.6% decline on a reported basis but a 0.5% increase LFL.
Year-to-date, WPP’s revenue reached £10,784 million, showing a 0.5% growth on a reported basis and 3.1% LFL. However, revenue less pass-through costs for the year so far was £8,364 million, marking a 3.3% decline on a reported basis and a 0.5% decrease LFL.
Segmental performance
In Q3 2024, WPP’s Global Integrated Agencies posted a modest increase of 0.5% in LFL revenue less pass-through costs, while Public Relations grew by 0.2% and Specialist Agencies improved by 0.8%.
Year-to-date, the Global Integrated Agencies segment declined by 0.3% LFL. Public Relations saw a decline of 0.5%, while Specialist Agencies experienced a sharper decline of 2.9%.
Regional performance
North America showed solid growth in the third quarter of 2024, with LFL revenue less pass-through costs rising by 1.7%. The United Kingdom remained flat with no LFL growth, while Western Continental Europe recorded a 2.2% increase. The Rest of the World region saw a decline of 2.2% in LFL terms, mainly due to continued challenges in China.
For the year-to-date, North America showed a 0.5% decline in LFL revenue less pass-through costs. The United Kingdom dropped by 1.8%, while Western Continental Europe recorded a 1.9% increase. The Rest of the World experienced a decline of 1.7%.
Top five markets
Among WPP’s top five markets in Q3 2024, the USA showed a 1.9% increase in LFL revenue less pass-through costs, while the UK remained flat. Germany posted a 1.4% increase. However, China faced a significant decline of 21.3% due to macroeconomic pressures, while India grew by 2.3%.
Year-to-date, the USA posted a slight decline of 0.3%, the UK fell by 1.8%, and Germany dropped by 2.8%. China continued to struggle with a year-to-date decline of 20.6%, while India showed robust growth of 6.2%.
Client sector performance
In Q3 2024, the consumer packaged goods (CPG) sector demonstrated the strongest performance, with an LFL growth of 7.6%. The automotive sector grew by 5.8%, while financial services expanded by 5.3%. Travel and leisure saw double-digit growth at 10.8%. However, other sectors, including healthcare and retail, struggled. Healthcare and pharma declined by 7.7%, while retail dropped by 5.9%. The tech and digital services sector saw marginal growth of 1.3%.
Year-to-date, CPG posted a 7.3% growth, while automotive rose by 2.9%. Tech and digital services were down by 3.1%, and healthcare and pharma saw an 8.6% decline. Retail also posted an 8.6% drop, reflecting the ongoing challenges in these sectors.
Net new billings
WPP secured net new billings of $1.5 billion in Q3 2024, up from $1.4 billion in Q3 2023. For the year-to-date, the company reported $3.2 billion in net new billings, slightly down from $3.4 billion in the previous year.
Debt and financial adjustments
As of September 30, 2024, WPP’s adjusted net debt stood at £3.6 billion, marking a reduction of £0.3 billion compared to the previous year. The company is on track to complete the sale of its majority stake in FGS Global in Q4 2024, with expected net cash proceeds of around £604 million after tax. These proceeds will be used to reduce the company’s leverage.
Full year guidance
WPP has reiterated its full-year guidance for 2024, expecting LFL revenue less pass-through costs to range between -1% and 0%. The company is also targeting a 20 to 40 basis point improvement in headline operating profit margin, excluding the impact of foreign exchange rates. The company noted that it faces tougher comparatives in the fourth quarter and remains cautious given macroeconomic uncertainty.
Mark Read, Chief Executive Officer of WPP, said, “Our third quarter delivered like-for-like growth in net sales, with a strong performance from GroupM in particular. We saw growth in North America, Western Continental Europe, and India, though trading in China remains difficult.
“Most importantly, we returned to form in new business, winning Amazon’s media account outside the Americas and securing our media relationship with Unilever, including taking back the retail media and activation business in the United States. Our success with two of the world’s top ten advertisers demonstrates the renewed competitiveness of our offer. We are also proud to be supporting the new Starbucks leadership team with our recent creative win in the United States.
“Our people are increasingly embedding AI in the way that we work and deliver creative and media campaigns to clients, with usage of WPP Open up 107% since the beginning of the year. Supporting this, the creation of VML and Burson, and the simplification of GroupM, are delivering a stronger business and structural cost savings.
“We are encouraged by progress during the quarter, but with recent new business wins primarily impacting 2025 and continuing macroeconomic pressures, our expectations for the full year remain unchanged.”
