WPP plc

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to WPP 2024 third quarter trading update, conference call and webcast. At this time, all participants are in listen mode only. If you have a question, please press star one on your telephone keypad. Today's conference is being recorded. Now, I would like to hand it over to WPP CEO, Mr. Mark Reid. Please go ahead, sir.

Thank you very much, and good morning, everybody, and welcome to WPP's third quarter training update. I'm Mark Reid, and I'm here with Joanne Wilson, our CFO. We're going to take you through our results for the quarter and then answer your questions. Back at the interim results presentation, I said we've been extremely busy in the first half, and that's very much continued in this third quarter. We're making good progress against our strategic objectives, but we're starting to see concrete benefits with the return to form in recent new business outcomes and encouraging growth in our top clients. Our offer, based around fewer, stronger brands, underpinned by AI and new technologies, making us more competitive while making the company structurally more efficient to improve our profitability. There's more work to do, but I am very pleased with our progress. So before we start, please read the important quarterly statement on page two. And on page three, in terms of the agenda, I'll just go through the financial and strategic highlights before handing over to Duran to take you through the financial performance. We'll then briefly cover our strategic progress in the third quarter, before we get into questions. So turning to page four and the highlights for the quarter. I think our third quarter delivered a return to growth, which is important with 0.5% growth in net sales led very much by Group M. We saw growth across four of our top five markets and a broad based improvement across most client sectors, including the technology sector, which has weighed in us by 9% in Q1, 1% in Q2, returned to growth at 1.3% in the quarter. For the quarter, Group M grew 4.8% after 1.9% growth in the first half. It is a slightly easier comparative last year and a slightly tougher comparative compared to Q4, but the performance in the third quarter was encouraging. Our integrated creative agency declined 3.1%, driven by three factors, the impact of Pfizer, the macro and business conditions in China, and declines in project-based work against the more challenging macro backdrop. We can use to make strong strategic progress against the objectives we laid out for you at the beginning of this year, driving adoption of WPP Open, our intelligent marketing operating system, and leveraging our simpler structure. That progress drove tangible benefits in the third quarter with good growth in our top 10 clients. Our top 10 clients increased 7% in the quarter, despite the drag from the loss of a healthcare client. And you can see, really, a very good performance with our key clients. In terms of new business, we had a much stronger quarter. We said last quarter we wanted to be more competitive in new business. We are seeing that coming through. We won Amazon's media count outside the Americas with a pitch built around WPP Open and led by a team drawn from across GroupM and WPP, leveraging our unmatched global footprint. It's the world's largest advertiser, so a very important win for us. Unilever we've consolidated the creative work with additional key beauty brands and expanded our media relationship in the US in particular with retail media and activation. We remain Unilever's most significant media partner by some way. And Q4 also started well with our creative win at Starbucks at a pivotal moment for that business. and the retention of Honor's global media account, winning additional work, including within China. So we're encouraged by performance within the quarter, but with recent new businessmen primarily impacting 2025 and continuing macro pressures, our expectations for the full year remain unchanged. I'm sure we'll get into that in the Q&A. We were reiterating the guidance we gave back in August for light-for-light net sales of minus 1.0 to flats, with 20 to 40 basis points in margin improvement, proven very much by our structural initiatives and cost discipline. So Joanne, if you'd take us through the financial form.

Thank you, Mark, and good morning, everyone. So let me take you through some more detail on our financial results for the third quarter, and I'll start on page six. Revenue left past three costs fell 2.6% on a reported basis and was up 0.5% on a like-for-like basis. The point of growth includes a 2.9 percentage point headwind from FX due to sterling strengthening against a number of currencies. The contribution from M&A in Q3 was a small negative, reflecting some small disposals and the discontinuation of unprofitable business in smaller markets, which more than offset a small contribution from acquisitions. Like-for-like growth of 0.5% reflected a sequential improvement versus Q2, with Q3 lapping the softest like-for-like bombardment. Now moving on to page seven, and our performance by business. Global integrated agencies grew 0.5% in the quarter. Within this Group M, our media planning and buying business grew 4.8%, with broad-based growth in all major markets, partially offset by continued weakness in China. Group M saw good growth from both existing and new clients, with some benefits from a softer comp of 1.6% growth in Q3 23. Across our integrated creative agencies, we saw a like-to-like decline of 3.1%. This is broadly consistent with our first half. Hogarth continued to grow well, benefiting from new business wins and growing demand for its technology and AI-driven capabilities. Ogilvy grew well in the U.S., benefiting from recent client assignment wins. This was offset by weakness in China. VML continued to be impacted by the loss of a healthcare creative assignment, partially offset by growth in spending. by auto and tech clients. As in recent quarters, AKQA's performance was impacted by macro pressures weighing on project-related spend. Moving large PR, revenue-less pass-through costs grew 0.2% in the quarter, and within this burst and declined mid-single digits as the business continued to be impacted by the loss of Pfizer assignments and the impact of macro uncertainty on some areas of client spending. This was offset by continued growth at FGS Global. And finally, our specialist agencies grew 0.8%. Within that, CMI Media, our specialist healthcare media planning and buying agency continued to grow well. Lander and DesignBridge performance declined at a similar level to the first half, also impacted by pressures and project-based spending. This was partially offset by stabilization in some smaller agencies against easing comps. Page 8 highlights performance across our geographic segments. North America grew 1.7%, reflecting good growth in Group M and across the auto and financial services sectors, offsetting a weaker performance in healthcare. UK net sales were stable year-on-year in Q3, with strong year-on-year growth at Group M, benefiting from an easier comparative, offset by weakness in project-based spend at smaller agencies. By client sector, CPG delivered good growth, offset by weaker spending from healthcare, retail and automotive clients. Western continental Europe improved sequentially with 2.2% growth in Q3, reflecting growth in Germany, France, and Spain. CPG and automotive were the strongest performing client sectors. The rest of the world declined by 2.2% in the quarter, with growth in most markets offset by a decline of 21.3% in China on client assignment losses and persistent macroeconomic pressures impacting both our media and creative businesses. Central and Eastern Europe and the Middle East and Africa grew mid-single digit in the quarter, with LATAM growing low single digits. And now moving to trends across our key client sectors on page 9, where we saw an acceleration across most sectors. We continued to deliver strong growth in consumer packaged goods, our largest sector, which grew 7.6% in Q3, reflecting continued brand investment by our largest CPG clients. The technology sector saw further stabilisation, with growth of 1.3% in the quarter, which, although modest and against the soft comp, is encouraging. Automotive grew 5.8% on strength in the US and Germany, and financial services grew 5.3%, helped by new client wins and growth in our largest clients. Telecom, media and entertainment declined by 2.3% as the anniversary 2023 new business wins Healthcare and retail continue to decline, impacted by past client losses, however, at a slower rate than in the first half. Turning now to page 10 and the movement in adjusted net debt, as of the end of September, adjusted net debt was around £300 million lower than September last year. We continue to expect adjusted net debt at year-end to be broadly flat, and this excludes the impact of expected proceeds from FGS. As part of that, we continue our focus on disciplined working capital management as we work towards our target for a flat working capital movement for the full year. The lower level of adjusted net debt in September versus last year also reflects a lower level of M&A spend in the last 12 months. For the full year, the benefits net debt from lower M&A spend will be partially offset by some accelerated earn-out payments and higher year-on-year cash restructuring costs, which we expect to be in line with guidance. Moving on to guidance for 2024 on page 11, we are reiterating our guidance for like-for-like revenue-less pass-through cost growth of minus 1% to flat for the full year. The midpoint of this range implies Q4 like-for-like of minus 0.5%. Q4 is always the largest quarter, and there remains uncertainty with regards to client spending plans in the balance of year, reflecting a continued uncertain macro and political environment. This environment, together with the tougher comparatives in Q3, will likely weigh on Q4 relative like for like. And of course, our recent new business wins will not impact until 2025. We are also reiterating our guidance for improvement in headline operating margin of 20 to 40 basis points of constant currency, despite the short-term costs of staffing up for new business wins and continued investment across our business. This margin improvement reflects the strong execution of our three strategic initiatives which as well as setting us up for accelerated growth are also reducing structural costs in our business. We expect a 3.2 percentage point headwind to reported net sales from FX over the full year and expect to have an adverse impact of 20 basis points on full year margin based on current FX rates. This is based on an FX rate of 1.3 sterling to US dollars has up mid-October 2024. The impact of M&A on the full year is likely to be slightly negative with some sensitivity to the timing of the closure of the disposal of FGS global. This also reflects the small disposals and portfolio optimization actions mentioned earlier. So thank you, and I will now hand you back to Mark to update on our strategic progress.