NEW YORK & LONDON - WPP (NYSE:LON:WPP), a global leader in advertising and marketing services, reported its first quarter results for 2024, with figures aligning with company expectations and reaffirming its full-year guidance. The first quarter saw a slight decline in reported revenue to £3.4 billion, a 1.4% decrease from the same period last year, while like-for-like (LFL) revenue saw a 2.1% increase.
The company experienced a mixed regional performance with growth in the UK and Western Continental Europe offset by declines in North America and Asia Pacific. Notably, strong growth in India was overshadowed by a downturn in China.
The integrated creative agencies within WPP's Global Integrated Agencies segment witnessed a 3.3% LFL decline, attributed partially to the loss of healthcare client assignments and reduced spending by technology companies. Conversely, GroupM, WPP's media planning and buying business, achieved a 2.4% growth in revenue less pass-through costs.
WPP reported new client assignments, including AstraZeneca (NASDAQ:AZN) and Nestlé, contributing to net new billings of $0.8 billion. The company has made significant strides in its strategic initiatives, particularly in AI, with the adoption of its WPP Open platform by over 50,000 employees and integration with Google (NASDAQ:GOOGL)'s Gemini 1.5 Pro models.
CEO Mark Read expressed satisfaction with the company's strategic progress and the implementation of AI tools, which are expected to drive growth and improve organizational flexibility. The company also highlighted its creative accolades and new business wins, reinforcing the importance of creativity and innovation in its operations.
For the remainder of 2024, WPP anticipates LFL revenue less pass-through costs growth of 0-1% and an improvement in headline operating margin of 20-40 basis points, excluding foreign exchange impacts.
Despite the challenging macroeconomic environment, WPP's balance sheet remains robust, with average adjusted net debt for the first quarter reported at £3.5 billion, up slightly from £3.4 billion in the previous year. The company also completed a refinancing activity in March with the issuance of two bonds.
This article is based on a press release statement from WPP.
InvestingPro Insights
As WPP (NYSE:WPP) navigates through the complexities of the current economic landscape, the company's financial health and stock performance metrics, as per InvestingPro data, present a multifaceted picture. With a market capitalization of $10.65 billion, WPP's size remains significant in the advertising and marketing industry.
Still, the company's P/E ratio, standing at a high 76.76, suggests a premium valuation compared to earnings. This is further underscored by an adjusted P/E ratio for the last twelve months as of Q4 2023, which is even higher at 86.02.
On the dividend front, WPP has shown a commitment to returning value to shareholders. The company has not only maintained its dividend payments for 32 consecutive years but has also raised its dividend for three consecutive years, showcasing its dedication to consistent shareholder returns. The dividend yield, as of the latest data, is attractive at 6.13%, potentially appealing to income-focused investors.
InvestingPro Tips indicate that while analysts anticipate a sales decline in the current year, they also predict the company will remain profitable this year. This is in line with the profitability WPP has demonstrated over the last twelve months.
Moreover, the company's net income is expected to grow this year, which could signal a positive outlook for future earnings. For investors seeking a more comprehensive analysis, InvestingPro offers an array of additional tips on WPP, which can be explored at InvestingPro. Utilize coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to the full list of 11 InvestingPro Tips for WPP, providing a deeper dive into the company's prospects.
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