WPP reports Q4 profit despite global economic downturn

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Global advertising and marketing giant WPP has reported a 0.3% rise in its fourth quarter profits in what has otherwise been a challenging year.

Like-for-like revenue came in 3.2% higher at £14.85 billion, compared with £14.43 previously.

Pretax profits slumped, though, to £346 million versus £1.16bn for the year before, which the firm said was due the accelerated amortisation of ‘previously indefinite life brands related to the creation of VML and the impairment taken as a result of the 2023 property review’.

WPP is proposing a final dividend for 2023 of 24.4p per share, which together with the interim dividend paid in November 2023 gives a full-year dividend of 39.4p per share.

The strongest growth markets geographically were the UK and India, both of which saw gains of around 7.5% each. However, this was offset by weaker US trading which was due to ‘lower spend by technology, healthcare and retail clients, partially offset by growth in CPG, telecoms and automotive sectors’.

WPP reiterated its commitment to invest further in new technologies for the coming year, specifically artificial intelligence, where it hopes to build a leadership position.

Mark Read, Chief Executive Officer of WPP, said: “At our recent Capital Markets Day we detailed our strategy to capture the opportunities of AI, data and technology, while harnessing the full power of our offer to clients, building world-class agency brands, and driving strong financial returns through efficient execution.

“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. Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients.

“While 2023 was more challenging than we expected due to cuts in spending by technology clients, we delivered a resilient performance for the year with 0.9% like-for-like growth and a 0.2 point improvement in our headline operating margin at constant currency.

“This was driven by disciplined cost control, while continuing to invest in AI, data and technology.

“Our net new business of $4.5bn in 2023 included major new assignments with clients such as Allianz, Krispy Kreme, Mondelēz, Nestlé, PayPal and Verizon and reflects a stronger year-on-year performance in the fourth quarter.

“We are optimistic about the strategic opportunities ahead of us and are confident that we can deliver accelerated and increasingly profitable growth over the medium term.”

WPP’s shares in London were trading 2.5% lower on Thursday at £7.60 a share.