Wpp Plc Ord New

Good morning, everybody, and welcome to our 2023 first quarter results call. I'm here in C Containers with John Rogers, Tom Waldrom, and our investor relations team. And I'll just take you briefly through the highlights before John takes you through our financial performance, and we'll come back to close at the end and take your questions. On page two of the presentation, you should note our cautionary statement, which is important. to turn into page three and then four, highlights of the first quarter. I think we had a positive start to the year, reflecting continued momentum in the business and continued investment in our offer. We delivered first quarter growth of 2.9%, I think pretty much in line with our expectations, or maybe even very slightly ahead against probably the toughest comp of last year. We saw growth across the business, 3% in our integrated agencies, 2.2% in our public relations, public affairs firm, and 1.9% in our specialist agencies. I should just call out, you know, strong performance from Group M at 6.1% and also strong performance from Ogilvy. We continue to improve our work. We topped the World Advertising Research Council ratings in media, in creative and effectiveness in all three categories. and delivered one and a half billion dollars in net new business in Q1. I should also point out Ogilvy won Agency of the Year at Clio's two nights ago and reflects continued investments in our creative capability. That has been supported by acquisitions, particularly in influencer marketing. We made two acquisitions, we'll come on to later, and a series of partnerships. KKR took a minority interest in FGS Global, and we'll talk a little bit about that later on and what that means for us. And then overall, after positive first quarter, we're leaving our guidance for the year unchanged, which remains at like-for-like revenue at 3% to 5%, and a headline operating margin of around 15%. So those are the highlights. John, do you want to take us through the financial performance in more detail?

Thank you, Mark. So moving to the financials for the first quarter of 2023. So coming first to slide six, revenue less pass-through costs. At the reported level, we've seen an increase of 9.9% for the quarter. This is supported by a 6.3% point tailwind in relation to FX due to the weakness in sterling relative to last year. And also our targeted M&A strategy that Mark just referred to added 0.7 percentage points to reported growth and actually stripping out the impact of the disposal of our business in Russia last year, the contribution was 1%. On a life-like basis, we saw 2.9% growth against 9.5% growth in the same quarter last year, very much in line with our expectations and slightly ahead of consensus forecast. And looking forward, as Mark just said, we've reiterated our guidance for 3% to 5% growth for the full year 2023. So moving now on to slide seven and business sector performance, we continue to see broad-based growth across all of our business lines. So starting with the integrated agencies at 3% on top of the very strong 8.6% growth this time last year. And as Mark just called out, Group M in particular showed strong growth of 6.1% on the back of 12.8% growth in Q1 last year. And our creative agencies had a slightly slower start to the year at plus 0.7% compared to 5.6% a year ago. And within this, we saw strong growth at Ogilvy driven by exposure to CPG clients and increased their spend by 15% across WPP in the quarter and also driven by recent new business wins. However, this was partially offset by a slower start to the year at Wannabin Thompson, reflecting lower spend from some technology clients and a softer start to the year at Gray. In our PR businesses, we saw like-for-like growth of 2.2% compared with 14.1% a year ago. FGS Global performed particularly strongly, but we saw a slightly softer performance at BCW and Hill & Knowlton. And finally, specialist agencies saw growth of 1.9% versus 13% in the same quarter last year, with particularly strong growth in CMIR Specialist Healthcare Media Agency and strong growth at Lander & Fit. So turning now to slide eight and our top five markets representing two thirds of our overall net sales. So growth in the US of 2.3% was driven by growth in spending from clients in the consumer packaged goods and financial services sectors, offset by weaker spend by clients in the technology and digital services and retail sectors. In the tech sector, clients now have adjusted budgets to post-COVID levels of spending on some categories of hardware. And in retail, we've seen an impact from recent consolidation in the US supermarket sector. In the UK, growth was 7.4% on top of 8.1% in Q1 of 2022, with particularly strong demand from CPG clients. And Germany, our biggest European market, was up 4% compared with 16% this time last year, with broad growth in media and strength in the travel and leisure segment, partially offset by the runoff of a COVID-related government contract in Germany at one of our specialist agencies. As we signaled at the prelims, China continues to be a challenging market, declining 13% in Q1, as we flagged. We faced a tough comparison in China with 12% growth this time last year. Q1 also began with high levels of COVID infection as restrictions were lifted late last year. Towards the end of the period, we were encouraged by initial signs of recovery in the media market in China, and economic indicators are actually positive. So we expect to bounce back in Q2 against easier comparatives. Actually, excluding China from our overall like-for-like growth, would have delivered like-for-like growth to the quarter of 3.6%. India was also a little bit more challenging, down 1.4% in the first quarter, reflecting a tough comparison against Q1 2022, which grew at 25%, and there was some macro uncertainty at the beginning of the year. We expect a recovery to happen through the rest of the year, particularly around events such as the Cricket World Cup, and against easier comparisons in the second half. Coming on now to slide nine and looking at the main movements in our net debt through the quarter. So net debt at the 31st of March 2023 was 3.9 billion, representing an increase of 1.4 billion from the year end, driven by the usual net working capital movements, CapEx consistent with our four-year guidance, the investment in the three M&A transactions that Mark's already mentioned, and a slight strengthening of Sterling year-to-date. The typical seasonal outflow of working capital since the year end reflects a small underlying improvement actually versus the same period last year, benefiting from operational improvements and some reversal of the timing and mixed factors that impacted our year end position and we discussed in detail at the prelims. And we remain confident that we can deliver a flat trade working capital performance in 2023. That combined with a small outflow on non-trade working capital of around 150 million or so Again, as I guided to on the premiums call, you know, will result in a significant improvement in cash generation in 2023 over 2022. So moving to other items in the bridge, on CapEx, we maintained our focus on organic investment, including our campus program, opening new sites in China and Manchester. And as I said before, we continue to make Bolton acquisitions go, obviously, in 3K to strengthen our offer in the growth areas of influencer marketing and healthcare. And with that, I'll hand you back to Mark. Thank you, John.

So just touch on a few of the sort of business drives at the moment. So on page 10, I think, call out, we had a strong start to the year in terms of new business and in terms of recognition of the quality of our work. I'd highlight a few of the new business wins, the Adobe Media win in the Americas, win of production work alongside another partner at Mondelez, And then particularly the Maruti Suzuki win in India. It's actually India's second largest advertiser. Point out that India is now, I think, the world's most populous market. We now work with 45 out of the top 50 clients in India. Our business was recognized by Walk in all three categories, in media, in effectiveness, and in creative. as were our agencies, actually Ogilvy, Essence MediaCom, and WaveMaker. And I mentioned earlier, Ogilvy topped the Clios, the Agents Network of the Year, and the Clios two nights ago in New York. On top of the organic investment for business on page 11, we did make three acquisitions in the quarter, and one subsequent to the quarter, we acquired two businesses in the influence and marketing space. Given the amount of time consumers are spending on the social media platforms, Our clients are increasingly looking for ways to reach them, and many of those ways do involve influencers. Both of these businesses enable clients to invest more money behind influencer marketing. It's probably been the biggest challenge that they face through maintaining relationships with several hundreds of thousands of influencers, understanding their performance, their relevance, and helping clients use them in their marketing. We also acquired a small healthcare specialist PR business in Germany to further invest behind that fast growing sector. And then in April Landor and Fitch acquired AMP, a really interesting, creative, sonic branding agency based in Germany, but with some operations around the world. And those acquisitions are supported by a strategic partnership. We continue to develop our relationships with technology partners in a positive direction. I think I'd highlight that these span primarily the areas of CRM through Graze and e-commerce, and also both global in nature, and then a very interesting partnership in Japan with KDDI, and that represents Kyoko Matsushita, our new Japanese country manager's first major partnership in that market, and shows how we can sort of bring the strength of our global offer to bear in that country. On page 12, it's worth briefly touching on the FGS Global Transaction. KKR took a strategic investment in the company in March. And maybe just go back in history to the creation of FGS Global and what this means for us strategically. Back in January 2021, we brought together Finsbury, Glover Park, and Herring Schuettner. They were three public relations and financial PR firms that operated totally independently within WPP based in the UK, the US and Germany respectively. And one of the businesses had a minority employee investment. We brought those businesses together on a transaction with management heading towards an IPO with WPP as the majority owner. In October 2021, we saw the opportunity to bring that business together with Saad Vibinan, probably the leading US investor relations financial communications company in the US. So we formed FGS Global back in October 2021. That business has really performed extremely well. If you look at the merchant market tables for last year, they were number one by some measure in each region of the world in terms of deal volume and deal values for M&A transactions. That was recognised by KKR, who've come in to take out, in part, Golden Gate Capital, who's one of the investors in Saad Labinen, provide some liquidity to the management of the company, which is naturally changing somewhat. And we remain in a partnership with WPP, owning a majority stake, with the management of that business, and with KKR now as a strategic investor, online to develop that company over the next few years. It really highlights the value inside that company and accelerates the progress that we're making. Touch briefly on AI on page 13. I know it's a topic of a lot of interest to people. I think that at WPP we've been using AI extensively in our business for a number of years, primarily in our media business in Group M. through Zaxis and other parts of the company. We used it to target media, to optimize campaigns, to create audiences. And in the production part of this, Hogarth used AI extensively to create, you know, to produce work for all of the channels that consumers need. I think what's changed over the last six months is the application of AI, you know, through generative AI into the creative process of the production of language, video, imagery through AI. And that's really allowed us the opportunity to use it much more creatively in the company. There are many examples of the work we've done. It actually goes back to 2016, a campaign that Jay Walter Thompson then did for ING in Holland, or the work we did last year in India for Cadbury's Mondelez on Diwali. So I think we'd highlight three examples. The work that Ogilvy did from one list, which I'll show you in a second. AKQA Bloom have been using it to promote NotCo. It's a plant-based meat company from Chile, actually, and it uses it to show what would happen as animals age. It's great work from AKQA Bloom. And then Wunderman Thompson have been doing some work with the Iranian Democracy Council to highlight the future for women in Iran. And you can look at each of those pieces of work offline. But before we go on, I think we should show the work that Ogilvy did for the Mondelez brand Lacta in Greece. So could you play the film of his operator?

For hundreds of years, everyone was writing love letters, but it all came to a halt when this happened. And we are calling it iPhone. because mobile chatting has reduced beautiful words of love to something that your cat could have typed accidentally, eventually reducing love to a single tap. Lacta chocolate has always believed in expressing love in the most fascinating way. That's why it decided to use the most advanced technology there is to remind people how to write love letters again. Enter AI Love You, a web app that creates personalized love letters with the power of ChatGPT. And you might think, artificial intelligence expressing feelings? Who would want this? According to a recent study, one in three men, so lots of people. With AI Love You, you just say whom you want to say I love you to and why. In a few seconds, AI composes a love letter probably better than the one you would write if you are not exactly a poet at heart. You can edit it. and change the tone of voice before sending it via a unique link. When the recipient points their camera at any Lacta chocolate, they will see the love letter magically pop up with AR. And by magically, we mean through hard work, because we trained a neural network to recognize all 36 Lacta packages. Simple as that. No QR code needed. And that's how writing love letters became a thing in 2023. The end.

Very good. So I hope there's something useful in that for everyone on the call. So in summary, I think we had a positive start to the year, very much in line with our expectations. And we saw a strong demand for our services from clients. We made good progress against our future plan in the areas of creativity, AI, acquisitions, and continued to invest both organically and through acquisitions in those areas. I think the FGS global transaction with KTR does highlight the value and growth potential of that company within WPP. So NetNet, I'm sure we'll get on to these questions, remain on track to deliver our guidance. And looking forward, longer term, we're well placed in an environment of increasing complexity as AI changes our industry in a fundamental way as a trusted partner to our clients and a more modern and future-facing offer to prosper. So thank you very much. Now, before we take questions, there's one topic, one person I'd like to thank, and that's John Rogers. This is John's last call with us. John joined back in January 2020, just think eight weeks before COVID struck and we were all locked up. And I have to say he steered us through COVID extremely well, coming up to speed with a very complex business, I'd say in record time. and helping us really to navigate that very successfully financially. We have the same later with the challenge we faced following the Russian invasion in Ukraine. So as he moves on, I'd say he leaves us in better shape financially and better shape strategically. So John, thank you very much. Thank you for your contribution. I wish you all the best in your next endeavors. So thank you, John. And I think we'll now open the line up to questions.

Thank you, sir. If you would like to ask a question at this time, please press star one on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you're also watching the webcast, please make sure to mute the computer's volume to prevent feedback through the phone while asking a question. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We will pause for a moment to allow everyone to signal. And our first question of the day is from the line of Lina Gaynor of BNP Paribas. Lina, please go ahead. Your line is open.

Hi, everybody. Mark, John. Congratulations on the results. And John, well, all the best for what's next for you. I have three questions. The first one is obviously under guidance. Sorry, not very original. But could you perhaps give a bit of color around Q2 and more importantly, how we should think about the trajectory of growth throughout the year. The second question is some kind of a follow up to that, where it would be useful for us to understand the visibility and how much of the year is already known or guaranteed. I know it's never really guaranteed, but some ideas if you could quantify how many months you have known, for example. And my third question is on margins. I know this call is not about the margins, but could you give us some elements around where you stood in recruitment in Q1 and your headcount plans for the next coming month? Thank you.

Okay. Why don't I give you some color in terms of sort of the guidance overall and what we're hearing from clients, and John can talk about sort of specifics on the phasing. I think we'll take the first two questions really as one question, and then John can talk to you about the margins. Look, I think overall, we're three months into the year. We're six weeks away from giving you the guidance. I think we remain confident of being within the range of 3% to 5%. I don't think at this point we'd say that that's changed really in any way from the last from six weeks ago, despite some of the turbulence in the financial system. When we gave the guidance, we knew that Q1 would be the toughest comp because of the strong comparative last year. I think we flagged that at the time. I don't think anything's really changed. When we've come in, I think Q1, I'd say very, very marginally ahead of our expectations, which gives us confidence to make the numbers for the year. I think overall in my discussions with clients, I didn't see any major change in client sentiment or client spending. I think those areas of the business that we knew would be slightly more challenged this year, like technology, have continued to be very slightly more challenged. And I think they've become more positive or more negative over the period. Perhaps the stronger earnings from Google and Meta in Q1 than expected, you know, give us some confidence that they're not going to deteriorate further. So I think things are really very much as we thought, as we thought, and I mean, John can talk more about what that means for you to understand in sort of Q1 and the second half. And I think we understand the challenges of looking at an acceleration during the year as well.

Yes, hi, Leanne. Thanks, Mark. So just in terms of phasing, I mean, I think the key message is no new news. It's only six weeks since we last gave the guidance and we were very clear on the prelims call that we thought Q1 would be a little bit softer. And so hence, mathematically, we expect the second half to be a little bit stronger than the first half. I mean, I think it's as simple as that. And as Mark just said, we've delivered Q1 pretty much in line with expectations, maybe a little bit better than we thought, but not significantly. And I think if you think about the sort of the range that we've given, if you looked at the two year wrap, which is about 11 to 12% or so, and if you maintain that through the year, then you'd end up at the top end of our range, that would give us an outturn of about 5%. And if we were to maintain Q1's performance through the rest of the year, that would obviously put us at the bottom end of our range at 3%. That, I guess, gives you one way at least of bounding the range, but 3 to 5%, I think we are very comfortable with, albeit we expect the second half to be a little bit stronger than the first. In terms of visibility, again, I don't think any new news here. Typically, we have visibility of 80 to 90% of our spend looking forward to 12 months. It very much varies business by business. PR agencies will typically have good visibility going out three months or so. Our creative agencies will have visibility going out a little bit longer, but there's no material changes in our visibility from, for example, this time last year. And in terms of margin, I would say one way to think about that, I think partly because of the phasing of our investment in IT, which I talked about at the prelims, which is largely front-end loaded. And also because we expect the second half on a net sales basis to be slightly stronger than the first, then I think we'd expect directionally in the first half margin to be flat, maybe a little bit negative year on year in the first half. And we'd expect to outperform in the second half, but all of which would net out to a margin of around 15% on a constant currency basis at the year end. So entirely consistent with the guidance that we gave at the prelim. And I would say, by and large, in all aspects, actually, nothing, unfortunately, much has changed since the Breelance in terms of the underlying dynamics of the business. We're pretty much in line with where we thought we'd be. One thing I'd say on headcount, just the detail question there. We're actually, I think, in the quarter itself where we've got a thousand fewer people at the end of the quarter than we had at the beginning of the quarter. That, I think, shows good discipline about keeping control over our cost base. Actually, 800 fewer permanent people and about 200 fewer freelance people. So good control over our costs. And actually, if you look at the year-on-year position in terms of our permanent headcount, we're probably up at around 3%. So quarter-on-quarter, we're up at around 3%. And on a freelance basis, we're down at around 15%. So if you remember this time last year, we had to employ quite a lot of additional freelancers because net sales was ahead of expectations. And so we have to support that client work with freelance resource. This year, we've kept very good control over our freelance spend. So in terms of our numbers, we're down about 15% year on year in terms of our number of freelancers. When you aggregate those two together, so the 3% increase in our permanence and the 15% reduction in our freelancers, we're up roughly 1%, just over 1% year on year in terms of number of people, which again is entirely consistent with the guidance that I gave on the prelims call only six weeks ago.

Understood. Thank you very much.

Thank you. Great. Our next question is from the line of Tom Singlehurst from Citi. Tom, your line is now open. Hi, Tom.

Hi, Tom. Morning. Thank you very much. And yeah, a big thank you to John. The level of transparency on communication and disclosure has come on leaps and bounds. So it's very much appreciated and all the best for what comes next. But three questions to keep you busy in the meanwhile. First one. uh china heavily negative in the first quarter but going into the second quarter the comp is you know i think something like 18 percentage points easier um i suppose the question is does this all work through in the second quarter and does that mean i know you specifically said second half just then in terms of better growth profile because that better growth profile kick off immediately in the second quarter um i suppose in contrast to that the India comp gets a lot, lot harder. And so the question there is, when you did your deep dive on India and Brazil, I think at that point, Stefano, or maybe even you, John, mentioned that you had aspirations for India and Brazil both to grow. So the question is, do we think overall that's still on track? And then the third question is on the FGS side. global stake sale. I mean, I know you mentioned some of the mechanics of the deal. I just wondered whether that actually means anything concrete will change in how that business is run. And I suppose, um, whether it presages scope for more minority stake sales in sort of discrete business units elsewhere in the organization, because the multiple is off the charts relative to the multiple that you're, you're, you're, um, you yourself are trading it. So those are the three questions. Thank you.

Well, let's start with the FGS question. So I think the answer is it doesn't presage any more stake sales. I mean, it was a unique situation in that we brought together three businesses and I highlighted that there was already an employee investment, a management investment in that. Then we did the transaction with Saad Babinam, which brought a financial partner and an equity management, equity stake, significant management equity stake from the Saad Babinam partners. into the overall structure. So I think from a structural perspective, it's the same post this transaction versus prior to this transaction, perhaps with changes in the percentages, you know, WPP is the majority investor. There's a significant financial partner and there's a significant management investment in the company. So I don't think anything in reality has changed apart from the fact that it's shined, I think, as you say, a multiple disparity on the overall value of WPP versus to maybe versus the private market and the growth potential of the business. And I don't think we expect, and we have no plans and I don't foresee any plans to do a similar transaction in other parts of the business. It's really a unique situation, given the starting point and the opportunities ahead of us, which has been significant, really bringing, and Sava Bin is a fantastic business. We might not know it well in the UK. But it's a very, very strong business in the US. And we've created, you know, with, you know, Roland Rudd and Alex Geiser and the team there, you know, a very strong and effective partnership that's going to attract some of the best people from that industry into the company. On China, you know, I think our broad expectation is China will go from being a dragging Q1 to a positive impact, having a positive impact on WPP's growth in the rest of the year. that the situation is complicated by a strong comparative last year and by lockdowns in China in January, which obviously have eased. And we are starting to see, you know, an improvement in the media market in March and April that we expect to flow through into our business in the rest of the year. And in India, I'd say that, you know, you saw the strength of that business, but we do expect it to grow on the balance of the year despite the comparatives.

Just to build on Mark's comments, I think across India, China, and Brazil for the full year, we expect all of those markets to be good growth opportunities for WPP as they have been in the past. To your point, you've highlighted issues of phasing. We've covered China, I think, already, but the comp gets a lot easier in Q2 and then even easier in Q3 and Q4. We'd expect to return to growth in Q2 and indeed in Q3 and Q4, maybe step up a little bit more because the comps get comparatively easier. In India, I think you raised the point that the Q2 comp is pretty tough. I think we were up about 45% last year, so we're lacking pretty strong growth in Q2. But we really would expect to return to growth in India in the second half when the comps do get somewhat easier. And on Brazil, you know, I think we'd get some small growth in Q2 and again, stepping up again, growth higher in half to on the back of slightly easier comps. But overall, you know, good growth across all of those markets for the full year. They've been and continue to be good growth engines for our overall business.

Super. Thank you very much. Thank you, Tom.

Our next question today is from the line of Julian Rock from Barclays. Julian, please go ahead.

Yes, morning, Mark, John and Tom, and Caitlin and Anthony. Thank you, John, for being so transparent on numbers. The bar is very high for your successor. So first question, coming back on FGS, can you give us some numbers? Because I calculated that KKR paid 70 times P when you trade on 9. So is it because FGS is expected to grow well above WP going forward? What have they grown out annually on an organic basis and pro forma since 2019? For instance, you told us 18% in 21, but what about 20 and 22? That's my first question. The second one, sorry to come back on China again, but you say we turn around in Q2, but are we talking 0 to 5, 5 to 10, more than 10? Some numbers there. And then the last one on AI. A long question, sorry. So say you win a content creative budget where a client will spend 100. Historically, you run your business on a cost plus basis. So you take your 15% margin, spend 85 on delivering what the client wants. Thanks to AI, it will cost you far less. So let's say you only spend 40. don't think the client will let you get a 60 margin rather than 15. So they're going to say, why don't we share the spoil and we're going to pay you 60 to 70 and your margin is higher. So what do you think about this specific point, i.e. AI could lead to higher margin but lower revenue for content and creative budget? Thank you.

Okay. So on FGS, I think we've given you the disclosure that we're going to give you at this point. I wouldn't want to be drawn into you know, further details of their performance, and I think we'll have to see how that, you know, we'll see how the business continues, but I just agree with your point about the comparative valuations. On AI, I saw you ask the question before, but I don't, I sort of, at one level, I hate to disagree with Julian, but I don't totally follow the point. I mean, there's, if you think about how we do work, there's creativity, there's the creative process, there's the production process, and there's the media process, if you're sort of thinking about it simplistically, all underpinned by data and technology. I think as it relates to the creative process, distinctly from the production process, I don't think AI is going to make people suddenly more creative or shorten that process. I think the amount of money we get paid for ideation, for strategy, for account management, all those things are substantially, I think, going to be unchanged. if anything might be increased by the application of AI because it's going to demand greater volume of assets. I think on the production process, there is a question there around volume versus price. We need a greater volume of creative assets to be produced. a much greater volume, by the way, as the number of channels explode and the formats implode. And by the way, when you can combine media and creative, we're going to be using millions of different types of creative assets in relation to the data signals that we get from our technology and media. Much of that work is, some of that work is done on an hours basis, but much of that work is done on a fixed price basis. And so it's not going to be directly comparable. And I think the jury is out on whether the explosion in volume offsets the sort of reduction in price. All of our experience with technology to date in WPP's businesses, it tended to create more jobs than it's destroyed. And so I don't think net one can come to the conclusions you've come to. They're also, by the way, the opportunity for us to gain market share by investing more and being more competitive. and you know i think some of what you're seeing in terms of uh clients looking to streamline their partners and work with partners that have the wherewithal to invest in this indicates opportunity for us to gain market share by best replying ai through our work okay thank you clear on your question so john's got to answer your question yeah just on china i mean yeah obviously

we've we've given quite a lot of guidance on this already want to try and avoid getting drawn into guidance on a quarterly basis but I guess mathematically if you looked at the the two-year wrap and you have that consistent q2 versus q1 then you'd be much more likely to be in the range of five to ten than in the range of zero to five which were the two that you sort of

know suggested or not on in your question so that that may be one way of looking at it okay thank you thank you our next question of the day is from the line of lisa yen of goldman sachs lisa your line is now open uh good morning um and um yeah all the best as well thank you so much for your your um input A couple of questions, please. So firstly, on the four-year guide, I think you said that the four-year results on the three to five pricing will probably be three to four and rest is volume. Could you talk about the evolution of that mix in the first quarter? I guess you probably didn't have the three to four. So what would you expect basically the pricing contribution to accelerate through the year? So that's the first question. Secondly, on the performance in Q1, I mean, UK was very strong, so just wondering, like, you know, what's going down there. I think, you know, probably the UK numbers are also very strong, and that's going to be sort of stable for the rest of the year. And third question is on the restructuring. I think you said the 180 million obviously doesn't include any potential additional restructuring. coming from the property review, when should we expect to hear on that property review? Or can you maybe give us any sense of like, you know, the size of potential additional restructuring that could be coming this year related to that?

Thank you. Well, Jo, why don't you take this? I think before, just on the UK, you know, to make the sort of qualitative point, I think we have a very strong business here in the UK. I think that the growth reflects the breadth of our business beyond sort of traditional media advertising, because it's certainly outperforming the kind of classic advertising market. And I think it also reflects sort of the importance of the UK as a creative and a media hub. But John, why don't you take these specifics on pricing in the UK and then on.

Sure. Okay, well, at least in terms of your question on pricing, we said at the prelims that we expected price increases to be roughly 3% for 2023, and we maintain that guidance. That still holds. I would say in terms of Q1, the benefit of pricing in our number would be 1.5% to 2%, so we are seeing volume growth in our Q1 and probably pricing around 1.5% to 2%. Why is that different? Well, because it's largely down to the timing of price negotiations with clients that impacts when we put price increases through. So that's why you'll see it slightly differ through the year. But we're very comfortable with the guidance that we gave of around 3% or so. In terms of restructuring from our property review, again, which we discussed at our prelims, which largely focuses on the US as a market where we hold a lot of property. We would expect to update the market at our interims on that in terms of some of the details there. I don't want to be drawn at the moment in terms of quantum. I think we need to do the full review first and then we'll update in detail at the interims.

May I actually ask a follow-up question? Yeah. So I think... You know, clearly, Mark, you sounded very, very confident on today's call. It doesn't look like anything has changed versus the full year results. It does look like Pubis' Omnicom was slightly more cautious in tone. So just curious, like, you know, any maybe reason why, I don't know, you're maybe not seeing what they were saying. It may be some difference in geographic mix. And specifically, Omnicom said it will be a stretch to reach to the top of their guns, which is 5%. Do you think the same would apply to WPL? Would you say you're as comfortable with 5% as you are with 4% or 3% at this point?

I don't know that our tone is necessarily different from theirs. I mean, we're saying it as we see it, which is there's no real change from six weeks ago, and there have always been challenges in the economy for the year. And so the things that we knew about remained the things that we knew about. We knew technology would be a little bit softer. We knew China would improve a little bit over the years. I don't think anything's really changed. I mean, the one way to think about it that might help you, Lisa, is we did 9% last year in Q1 and 3% in Q1 this year. So that's sort of simplistically 12. And we did 7 for the year. If we continue to deliver 12 on a two-year basis, that would take us to 5. And I think we're confident of being in that range of 3 to 5. And that's sort of a sort of a simple, maybe too simple a way of looking at it, but I think that that's why we will be in that range.

Okay, thank you.

Our next question today is from the line of Adrian de St Hilaire of Bank of America. Adrian, please go ahead now.

Thank you very much, and indeed, Godspeed, John, for the future. Thanks for help. Q questions then. I'm a little confused with trends in the ad market right now. We've heard some of the digital guys talk about an improvement and some acceleration into Q2, but then we're also seeing weakness elsewhere and caution elsewhere. So what do you observe on your end and how do you think this plays out for GroupM and the broader WPP? That's the first question. Then secondly, you gave us some interesting color about what you expect for Brazil, India, China for the rest of the year. we do the same exercise with some of the bigger markets like, you know, US, UK, Germany. Thank you.

Okay. I mean, look, I'll take the first question. Maybe John can take the second question. I think that, you know, GroupM expect media advertising to be, ad spend to be around 6% in 2023, very, very slightly down on 2022. And they grew GroupM at around 6% in Q1. I'd say that, you know, the tech companies have very tough comparatives. I think Google, as you say, were up 3%. Google and Meta are both up 3% in Q1, but Google's comparative, I believe, was 23% last year. So, you know, they're facing sort of a somewhat different situation comparatively, and our comparatives, you know, get slightly easier as the year goes on, but not significantly. So I think if you look at the year overall as being a little bit softer than last year, and maybe the comparison is driving the quarterly trends. But I come back to where John started. We're in the range of 3% to 5%. I wouldn't say that 5% is better than 3%, but not necessarily tougher than 3%, except by definition. And we're sort of confident that's where we'll be, really. John?

Yes, Adrian, again, we're not wanting to get drawn into market by market analysis, country by country, quarter by quarter. Look, I think what I would say is that if you look at the numbers for the US market in Q1, for the UK, just north of 2%, and then the UK, strong at 7%, and then Germany at 4%, as it happens, they are all I would say pretty good indicators in terms of our full forecast for the year. Now there is some phasing in there and et cetera through the quarters, which I won't go through in detail, but they're not bad indicators of the direction of travel for the full year outturn for those specific markets.

Okay. And if I could just squeeze one more follow up and last question for you, John, on the working capital stuff, it seems that you're highlighting in the release that clients are now demanding maybe longer payment terms. Is that something which you've seen change in the last few weeks, maybe a few months?

No, we're always under pressure. It's always a big part of our negotiation with clients. We've always been actually pretty robust in terms of holding our trading terms. There's been no material changes, I would say, in the nature of that negotiation over the last six months or so, and probably actually in the last year or so, it's always been a hot topic for debate. It's been a hot topic for the last 10 years. Yeah, the pressure's there today as it was, to Mark's point, five, 10 years ago.

Okay, thank you.

Our next question today is from the line of Omar Sheikh of Morgan Stanley. Omar, please go ahead, your line is open.

Yeah, great. Thanks. Good morning, everyone. Just got a couple. Maybe if I could start on the creative business. It looks like that slowed quite a bit in the quarter. I mean, despite the fact the comps are actually a bit easier. So I just wonder whether you could give us a bit of color on what's going on there. Is it you called out a Wunderland Thompson and Gray? Is it kind of client losses? Is there something competitively going on? Is it just a client mix? Just some help there would be helpful. And then secondly, just... Looking at your organic growth over the last three or four courses, there is a bit of a kind of a gap opening up between your peers, the big five holding companies. You are slightly underperforming. So how would you explain that gap? Is it business mix? Is it sort of a bit less exposure to consulting, data analytics? Is it geographic mix? Just some help there would be good. Thank you.

Okay. I think, look, on the first question, media versus creative, I think But GroupM's business, you know, we've always been clear that our media business is a fantastic business. And, you know, I think particularly in times of sort of nominal advertising growth, GroupM's top line is probably more driven by ad spend. You know, if the market's growing at 6% this year, GroupM did 6% in Q1. I don't think that could surprise us. Our creative businesses have somewhat different dynamics. And so I think have been a little bit softer in Q1. And as you correctly point out, we've had some business like Ogilvy do well, some business like Wunderman Thompson and Gray have a slightly slower start to the year. But I think if you look at the account wins that we've had, we've had a good performance there. In terms of the organic gap, I'd encourage you, one, to wait till all the companies have reported, and secondly, to be careful in comparing revenue and net sales. And I'd point out that our our revenue performance is similar to one, and our net sales performance is slightly lower than another. So I think we're not yet through the reporting system, and I'd say we feel good about our top line performance. We'd always like it to be stronger, but I think we feel good about our top line performance.

Okay, thanks a lot.

Thanks. Our last question today is from the line of Silvia Cuno from Deutsche Bank. Silvia, please go ahead.

Thank you. Good morning, everyone. And a warm thank you to John. Best of luck in your next chapter. My first question is also on the creative agency performance. Just a follow-up to the prior one. You talked about some areas of slowdown already, but just wondering if you could talk a bit more about net sales today from areas like experience, commerce, and technology within that mix? Is that still close to 40% of that segment X group M? And then just a second question on the FX impact to date. So if we take the current FX rate for the rest of the year, what sort of impact do we expect for revenue and margin? Thank you.

Hey, John, do you want to tackle those?

Yes, so on the FX, I would say we saw, as you see in the first quarter, effectively a tailwind of 6%, and we'd expect if you translate the current rate through to the full year, we'd see a sort of headwind of, well, flat to 1%, something of that nature on the FX. And in terms of your question on the split between experience, commerce and technology, we don't actually report on that on a quarterly basis. We'll give you a further update on that split at the interims, but I wouldn't expect any of those trends in the growth of those areas to have differed markedly from what we reported at the prelim six weeks ago. Thank you.

And there are no further questions at this time. So I'd hand call back over to Mr. Mark Reed for closing remarks.

All right. Well, thank you all. And thank you all for joining. As we said, we had a good start to the year and remain on track to meet our guidance. i'd like to thank john for his contribution and say that um joanne started last week she's here listening to the call and she'll be on the next call um at the half year so thank you everybody and um we'll be here to answer any of your questions in more detail offline thank you thanks everyone