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(Alliance News) - WPP PLC on Thursday looked beyond a demanding 2023, which saw profit collapse, and expressed a more upbeat view of future prospects.
Chief Executive Mark Read said "2023 was more challenging than we expected due to cuts in spending by technology clients," but added he was "confident" WPP can "deliver accelerated and increasingly profitable growth over the medium term".
The stark impact of the well documented cuts in advertising spending by companies worldwide as economic growth slowed and interest rates rose was laid bare in WPP's annual results.
Pretax profit slumped by 70% to GBP346 million in 2023 from GBP1.16 billion the year prior. Headline operating profit was little changed at GBP1.75 billion compared to GBP1.74 billion before, in line with a Vuma-cited consensus.
Diluted earnings per share totalled 10.1 pence, down 84% from 61.2p before.
Revenue was more resilient, rising 3.2% on a comparable basis to GBP14.85 billion from GBP14.43 billion.
Revenue less pass-through costs edged up by 0.9% to GBP11.86 billion from GBP11.80 billion.
This was a touch below the Vuma-cited consensus of GBP11.87 billion.
WPP said fourth quarter revenue less pass-through costs on a comparable basis rose 0.3% from the year prior, with ex-US growth of 3.1%.
This benefited from strong progress in the UK and India partially offset by declines in Germany and China.
But US markets remain depressed. Fourth quarter revenue in the US declined 4.5% on a comparable basis.
This was primarily due to lower spend by technology, healthcare and retail clients, partially offset by growth in fast moving consumer goods, telecoms and automotive sectors, WPP said.
WPP described its new business performance as "solid".
New billings fell in the course of 2023 to USD4.5 billion from USD5.9 billion in 2023.
This included major new assignments with clients such as Allianz SE, Krispy Kreme, Mondelez International Inc, Nestle SA, PayPal Holdings Inc and Verizon Communications Inc and reflects a stronger year-on-year performance in the fourth quarter, WPP said.
Fourth quarter net new billings ticked up to USD1.1 billion from USD0.8 billion the year before.
The current pipeline of potential new business remains higher year-on-year, WPP noted.
Cost savings from the 2020 transformation programme were disclosed of of GBP475 million ahead of the planned GBP450 million.
WPP is backing artificial intelligence to propel further growth in the business.
"AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients," Read said.
Looking ahead to 2024, WPP forecast comparable revenue less pass-through costs growth of 0% to 1%, with improvement in headline operating profit margin of 20 basis points to 40bps (excluding the impact of FX).
A unchanged final dividend of 24.4 pence was declared taking the total payout 39.4p, the same amount as paid in 2022.
Shares in WPP eased 2.7% to 759.60 pence in London on Thursday morning.
By Jeremy Cutler, Alliance News reporter
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