WPP Capital Markets Day 2024 - Seite 2

Updated medium-term targets

• 3%+ LFL growth in revenue less pass-through costs
• 16-17% headline operating profit margin
• Adjusted operating cash flow conversion of 85%+¹

Previous medium-term targets, outlined at WPP’s Capital Markets Day in December 2020, were for 3-4% growth in revenue less pass-through costs including an M&A benefit of 0.5-1.0% annually; with a headline operating profit margin of 15.5-16.0%.

2023 expected out-turn and 2024 outlook

WPP will report 2023 results on February 22^nd. We expect to report results in line with our guidance ranges with:

• 2023 LFL revenue less pass-through costs expected to be 0.9% consistent with guidance given at Q3 2023 of 0.5-1.0%
• 2023 headline operating profit margin expected to be 14.8%, equivalent to 15.0% on a constant currency basis, which is at the top end of guidance of 14.8-15.0% (excluding the impact of FX)

Looking ahead,

• 2024 LFL revenue less pass-through costs growth of 0-1%
• 2024 headline operating profit margin improvement of 20-40bps (excluding the impact of FX)
• Our plans include annual cash investment of around £250m in proprietary technology to support our AI and data strategy

Mark Read, CEO of WPP, said:

“The past three years have demonstrated the power of brands, creativity and investment in marketing to drive growth for clients and to build significant value. Research demonstrates that those companies with the strongest brands deliver the highest returns to shareholders.

“AI is transforming our industry and we see it as an opportunity not a threat. We firmly believe that AI will enhance, not replace, human creativity. We are already empowering our people with AI-based tools to augment their skills, produce work more efficiently and improve media performance, all of which will increase the effectiveness of our work. We also see opportunities to sell new AI-driven products and services to our clients and to capture more growth in areas like production.

“Our long-standing investments in AI, including our AI-powered platform, WPP Open, and our acquisition in 2021 of Satalia, a leading UK AI company, are at the heart of our competitive offer. An ongoing annual investment of £250m in data and technology to support our AI strategy is included in our 2024 financial plans.

“While we had to navigate a more challenging environment in 2023, we see strong future demand for our services and are confident we can accelerate our growth over the medium-term.

“Today, the team and I look forward to demonstrating our commitment to leadership through innovation and sharing our plans for improved and sustained returns for our people, our clients, our communities and our shareholders.”