WPP plc

Hello, everyone, and thank you for joining the WPP Q1 Trading Update Call. My name is Claire, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2 on your telephone keypad. I will now hand over to Joanne Wilson, Group Chief Executive Officer of WPP, to begin. Please go ahead.

Good morning, everyone, and thank you for joining us for our first quarter results. I'm joined today by Tom Singlehurst, our Head of Investor Relations. Hopefully, you've had time to read the press release from this morning. There's also a full deck that accompanies this session with our usual disclosures, including our cautionary statements, which you should read carefully and take note of. Before we dive into the numbers, this is, of course, the first quarter that we are reporting on since we outlined the Elevate 28 strategy. As you know, this is a multi-year plan focused on returning WPP to growth. While it is still early days, we are very much on track against our strategic plan and encouraged by the client and employee response to the actions we are taking and the changes we are making. Driving this scale of change takes time and, of course, won't be linear, but there are definitely encouraging signals, which I will talk about shortly. Before that, I'm going to share some detail on our first quarter financial performance, and then I will open the call up for your questions. And starting with our operating performance in the first quarter on slide four, like-for-like revenue-less pasture costs fell 6.7% in the first quarter, with organic revenue growth, a key metric disclosed by some of our peers, down 4%. Both figures represent a mild sequential improvement from the fourth quarter of last year, and were in line with our expectations. The impact from M&A was negligible, and FX represented a headwind of 2.1% in the quarter, resulting in a reported decline in net revenue of 8.9%. You will find further detail on performance by business segment, geography and client industry in slide 5 of the presentation, but I would call out the following features of performance in the first quarter. And starting with business segments, WPP Media saw a like-to-like decline of 8.5% in the first quarter, While this was a sequential improvement from a double-digit decline in Q4-25, we continue to see a significant drag from gross account losses, while new business won in the fourth quarter and in the first quarter this year will take time to ramp up. Performance across our non-media businesses showed a slight decline quarter-on-quarter. However, we delivered growth across WPP production and our larger specialist agencies, including Landor, DesignBridge, and CMI. By geography, the shape of performance largely reflects account losses, which weighed most heavily on North America and the UK. Elsewhere, we see signs of stabilization, including sequential improvement in Asia-Pacific, and with pockets of growth in markets including India, Italy, and Japan. I want to also mention performance in the Middle East, which represents just under 2% of our business. The region saw a like-for-like decline of 12.6% in the quarter following low single-digit growth in Q4 2025. With the ongoing conflict, we expect the Q1 trends in the region to continue through the second quarter. By client sector, CTG in particular reflects the impact on client assignment losses. Meanwhile, we see a high degree of polarization across healthcare and tech. Looking at growth through the lens of our largest clients, Q1 like-to-like decline for the top 25 clients was 9.4%, which reflects the impact of specific client losses. This level of performance is not where we want it to be, but with organic growth, a lagging metric, this outturn is very much in line with our expectations. And turning to slide six, organic growth is our North Star as a management team, and improving this is the primary focus of the Elevate 28 strategic plan we announced at the end of February. Organic growth, however, is a lagging metric, and the focus in the first stage of our plan is on stabilizing the business. As we discussed in February, the key leading indicator of success is net new business, both new client wins and critically client retentions. Alongside this, we are also focused on leveraging strategic partnerships, implementing our operating model changes and delivering the associated cost savings, as well as progress on asset disposals to provide a greater degree of financial flexibility. On this front, we are encouraged with progress in the first quarter and our plans are on track. On new business, Q1 was the second consecutive quarter where WPP was ranked number one in net new business by J.P. Morgan. We also expect to be ranked number one by conversions, which more gnarly focuses on media. Key wins during the quarter included Estee Lauder, Estee Johnson, JLR, and Norwegian Cruise Lounge. And post-supporter clues, we were appointed as Wendy's media buying agency in the U.S., and we won Matura in Brazil. Just as important as client acquisition is client retention, and we were delighted to be reappointed by Tesco in the UK and across Central Europe and to retain mandates for Huawei in China and Red Bull in India. On partnerships, we announced the expanded partnership with Adobe in February. This brings together Adobe's industry-leading AI capabilities, content platforms, and data orchestration with WPP's deep strategic insights, creative prowess, and end-to-end transformation expertise. We are very excited about the potential from this partnership, and it is a great example of how we are expanding our go-to-market sales channel for enterprise solutions. We also continue to expand our data partnerships in order to build the value of the open intelligence ecosystem, including Trainline in the UK and the Sailing Group in Denmark. On the people front, we've continued to fill critical roles in our operational leadership, including Nancy Hall, the CEO of WPP Media in the U.S., Angela Steele as U.S. Chief Client Officer for WPP Media, and Andrea Suarez as CEO of WPP Media in LATAM. At the group level, Mark Taylor has joined as Chief People Officer, and Ann Isabel Schueri as our first Chief Transformation Officer, both of whom will play a critical role in supporting execution of our Elevate 28 plan. Now, there remains much to do, and we are laser-focused on the disciplined execution of the strategic initiatives to underpin the stabilisation phase of our Elevate 28 plan. The early actions we've taken to build a simpler, more integrated WPP, powered by WPP Open, are resonating strongly with clients, giving us the confidence that we are on the right path to return to growth and deliver longer-term, sustained returns for our shareholders. Turning to our balance sheet, and you can see the detail of where net debt stands at the 31st of March on slide 7. In short, average adjusted net debt at £3.3 billion continues to come down both year-to-date and year-in-year, albeit assisted by a relatively small beneficial impact from IFRS 9 amendments, which were effective from the beginning of 2026. I'm also pleased with the successful issuance of a $600 million 10-year bond in March, marking our return to the U.S. credit market after more than a decade. This takes our weighted average maturity to almost six years and covers all of our debt maturities through to mid-2028. As encouraged as I am by this, I want to re-emphasize that creating firm financial foundations is a core tenet of the Elevate 28 plan, and at the heart of this is a commitment to maintaining an investment-grade balance sheet. As we indicated in February, we have initiated processes to assess the potential sale of certain portfolio assets. Those processes are advancing as planned, and while we do not have any additional comments to make on them today, we will update in due course as appropriate. Looking forward and on slide 8, while we are encouraged by the first quarter performance, which was in line with our expectations, we still see ongoing volatility in client spending and note uncertainty in the Middle East. Coupled with the phasing of net new business, we continue to expect like-for-like revenue-less pasture costs to decline in the mid-to-high single digits in the first half of 2026, consistent with the performance in the first quarter, before seeing an improving trajectory in the second half. On profit, we anticipate headline operating profit margins for the full year to be in the range 12% to 13%, and expect H1 margins to be down, reflecting the impact of net sales performance and investment in our growth drivers. As shared previously, the in-year cost savings benefit from our operating model changes will be skewed to the second half. We also expect to rebuild our incentives, which are also skewed to the second half. Turning to cash flow, we continue to expect adjusted operating cash flow pre-working capital in the range of £800 to £900 million. And as a reminder, this includes the anticipated restructuring costs associated with the Elevate 28 programme and historical restructuring programmes. Including these, we would anticipate adjusted operating cash flow before working capital of 1 to 1.1 billion pounds. The final thing I want to mention before we open up to questions is the evolution of our reporting, both by segment and by geography, on slide 9. As shared in February, we are aiming to align our segmental reporting disclosures from past year 2026 with our new operating model, moving from three reporting segments to one, global integrated agencies. This corresponds to the vision and plans to make WTP a single, unified operating company. In 2026, we will provide additional disclosure on operating performance within the key units, WTP Media, WTP Production, and WTP Creative. This will include like-for-like growth and net sales splits, but will not include profitability metrics consistent with our peers. We will also shift our geographical reporting to four recalibrated regions, North America, Latin America, India, and Asia Pacific. We anticipate moving to this new reporting at the half year. And from 2027, it is our intent to also provide like-for-like growth and the net sales split for WPP Enterprise Solutions. So that wraps up my pre-prepared remarks. I would like to take this opportunity to thank all of our people for their hard work and their unwavering commitment in the year to date. And I would now be delighted to take your questions. So I'll hand back to the operator.

Thank you. To ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Nicholas Langratt from BMP Paribas. Your line is now open. Please go ahead.