TRADING UPDATE FIRST QUARTER 2020 29.4.2020 SAFE HARBOUR STATEMENT - - PowerPoint PPT Presentation

TRADING UPDATE

FIRST QUARTER 2020

29.4.2020

In order to utilise the ‘safe harbour’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’), WPP plc is providing the following cautionary statement. This presentation contains certain forward-looking statements – that is, statements related to future, not past events and circumstances, and including statements relating to the potential impact of the COVID-19 outbreak – which may relate to one or more of the financial conditions, results of operations and businesses

• f WPP plc and certain of the plans and objectives of WPP with respect to these
• items. These statements are generally, but not always, identified by the use of words

such as ‘will’, ‘expects’, ‘is expected to’, ‘aims’, ‘should’, ‘may’, ‘objective’, ‘is likely to’, ‘intends’, ‘believes’, ‘anticipates’, ‘plans’, ‘we see’ or similar expressions. Actual results may differ from those expressed in such statements, depending on a variety of factors including the risk factors set forth in our most recent Annual Report and Form 20-F under “Risk factors” and in any of our more recent public reports. Nothing in this presentation is intended as a forecast, nor should it be taken as such. Our most recent Annual Report and Form 20-F and other period filings are available on

• ur website at www.wpp.com, or can be obtained from the SEC by calling 1-800-SEC-

0330 or on its website at www.sec.gov.

2

SAFE HARBOUR STATEMENT

FIRST QUARTER 2020 TRADING UPDATE

Q1 Q1 HIGHLIGHTS HIGHLIGHTS FINA FINANCIAL PERF NCIAL PERFORMA ORMANCE NCE BUSINESS BUSINESS UPDATE UPDATE Q&A Q&A

AGENDA

Maintain health and safety of our people Provide uninterrupted service to our clients Help our communities through our creativity, media and technology Ensure WPP’s financial resilience to protect all our stakeholders

4

COVID-19 RESPONSE: FOUR AREAS OF FOCUS

FIRST QUARTER 2020 TRADING UPDATE

1 2 3 4

• Good start (Jan-Feb ex Greater China up 0.4%1) with March impacted by COVID-19 (-7.9%1)
• Significant impact in Q2, business well diversified
• Clients: Packaged goods, technology, pharma more resilient to date
• Geography: China emerging through other side
• Services: PR, ecommerce, production less impacted, some in greater demand
• Excellent net new business: $1 billion won in Q1, no significant losses YTD
• Strong liquidity and balance sheet: average net debt £2.1 billion, £4.4 billion of cash and

undrawn facilities

• Action taken to mitigate COVID-19 impact on profit and cash flow
• Careful balance to protect business for recovery

5

Q1 HIGHLIGHTS

FIRST QUARTER 2020 TRADING UPDATE

1. Like-for-like growth in revenue less pass-through costs. Like-for-like growth is at constant exchange rates and excludes the effects of acquisitions and disposals

FINANCIAL PERFORMANCE

7

REVENUE LESS PASS-THROUGH COSTS BY SECTOR

FIRST QUARTER 2020 £M 2019 £M Δ REPORTED Δ CONSTANT CURRENCY1 Δ LFL2 Δ LFL MARCH

Global Integrated Agencies 1,745 1,807

• 3.5%
• 3.2%
• 2.6%
• 6.6%

Public Relations 212 214

• 1.0%
• 1.3%
• 1.4%
• 4.4%

Specialist Agencies 409 450

• 9.0%
• 8.6%
• 7.4%
• 15.2%

Total Continuing Operations 2,366 2,471

• 4.3%
• 4.0%
• 3.3%
• 7.9%

FIRST QUARTER 2020 TRADING UPDATE

• 1. Percentage change at constant currency exchange rates
• 2. Like-for-like growth at constant exchange rates and excluding the effects of acquisitions and disposals

8

REVENUE LESS PASS-THROUGH COSTS BY REGION

FIRST QUARTER 2020 £M 2019 £M Δ REPORTED Δ CONSTANT CURRENCY1 Δ LFL2 Δ LFL MARCH

North America 938 945

• 0.8%
• 2.7%
• 1.9%
• 3.6%

United Kingdom 313 332

• 5.5%
• 5.5%
• 4.2%
• 9.8%

Western Continental Europe 467 490

• 4.7%
• 3.6%
• 3.7%
• 9.6%

Asia Pacific, Latin America, Africa & Middle East, Central & Eastern Europe 648 704

• 8.0%
• 5.4%
• 4.6%
• 11.5%

Total Continuing Operations 2,366 2,471

• 4.3%
• 4.0%
• 3.3%
• 7.9%

FIRST QUARTER 2020 TRADING UPDATE

• 1. Percentage change at constant currency exchange rates
• 2. Like-for-like growth at constant exchange rates and excluding the effects of acquisitions and disposals

9

TOP 5 MARKETS¹

1. Top 5 markets for continuing operations 2. Like-for-like growth vs prior year from continuing operations 3. Includes Hong Kong and Taiwan

REVENUE LESS PASS-THROUGH COSTS GROWTH² 2020 March

• 3.7%
• 9.8%
• 14.9%
• 29.9%
• 1.1%

2020 Q1

• 1.9%
• 4.2%
• 4.3%
• 21.3%

6.1% 2019 FY

• 6.0%

0.3%

• 0.3%
• 3.8%

9.7% USA UK Germany Greater China³ India

Headcount

20,000 11,000 7,000 9,000 8,000

FIRST QUARTER 2020 TRADING UPDATE

10

OTHER MAJOR MARKETS

1. Like-for-like growth vs prior year from continuing operations

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2020 March

• 7.1%
• 23.7%

0.0%

• 16.7%

2020 2020 Q1 Q1

• 4.0%
• 16.2%

3.8%

• 1.3%

2019 FY

• 1.3%
• 2.1%

1.0% 9.3% France Italy Spain Brazil

Headcount

2,000 2,000 2,000 5,000

FIRST QUARTER 2020 TRADING UPDATE

11

TRADE ESTIMATES OF YTD ASSIGNMENT WINS/LOSSES

Shaded wins announced Q2 2020

WPP AGENCY MEDIA (M)/ CREATIVE (C) ACCOUNT OFFICE BILLINGS $M

WPP C Intel Global 800 Wavemaker M Novo Nordisk Global 350 Grey C Discover NA 258 Mediacom M Hasbro Global 225 Mindshare M Playmobile Europe 30 Mediacom M P&G Turkey 30 VMLY&R M/C BASF Global 30 WI WINS NS

FIRST QUARTER 2020 TRADING UPDATE

12

SIGNIFICANT IMPROVEMENT IN NET DEBT YEAR-ON-YEAR (£M)

• 1.2%

1.2%

Notes:

• Itemised movements in net debt represent management figures, which may vary

from the presentation of the cash flow under IFRS

• Acquisitions/disposals include earn-out payments
• 4,017
• 4,624
• 1,540
• 2,827

13

USES OF FREE CASH FLOW

• 1. Acquisitions are initial payments, net of cash acquired, and include other investments and associates
• 2. Includes proceeds from disposals of property, plant & equipment (Q1 2020 nil, Q1 2019 nil, FY 2019 £174m), investments and subsidiaries (Q1 2020 £161m, Q1 2019

£179m, FY 2019 £2,468m), less cash on disposals (Q1 2020 nil, Q1 2019 nil, FY 2019 £327m)

• 3. FY 2019 net debt stated at 2019 actual exchange rates

MA MARCH CH YTD YTD 202 2020 MA MARCH RCH YTD YTD 2019 2019 FY FY 2019 2019

(Disposals)/acquisitions (excluding earnouts): Acquisitions¹ £22M £18M £94M Less disposals² (£161M) £(179M) £(2,315M) Net (disposals)/acquisitions (£139M) £(161M) £(2,221M) Share buybacks: % of issued share capital £285M 2.6%

• £44M

0.4% Balance Sheet Headroom: Undrawn facilities & surplus cash £4.4B £3.3B £4.8B Net debt at 31 March at 2020 exchange rates £2.8B £4.8B £1.5B³ Average net debt at 2020 exchange rates £2.1B £4.2B £4.3B³

FIRST QUARTER 2020 TRADING UPDATE

14

SIGNIFICANT LIQUIDITY AVAILABLE

Exchange Rates £/$ 1.240 £/€ 1.130 1. Swapped to £444m at 2.61%

Weighted Average Coupon 2.7% Weighted Average Maturity 7.9 years Available Liquidity £4,401M

FIRST QUARTER 2020 TRADING UPDATE £ T TOTAL CREDIT £ T TOTAL DRAWN

◼ £ bonds £400m (2.875% Sep ’46)

400 400

◼ US bond $220m (5.625% Nov ’43)

177 177

◼ US bond $93m (5.125% Sep ’42)

75 75

◼ Eurobonds €600m (1.625% Mar ’30)

531 531

◼ Eurobonds €750m (2.25% Sep '26)

664 664

◼ Eurobond €500m (1.375% Mar ‘25)/£444m Swap1

444 444

◼ US bond $750m (3.75% Sep '24)

605 605

◼ Eurobonds €750m (3.0% Nov ’23)

664 664

◼ US bond $500m (3.625% Sep ’22)

403 403

◼ Eurobond €250m (3m EURIBOR + 0.45% Mar ’22)

221 221

◼ Eurobonds €250m (3m EURIBOR + 0.32% May

’20) 221 221 Debt Facili liti ties es 4,405 4,405 Other facilities 2,823 112 Net cash, overdrafts & other adjustments – (1,690) Total l Borrow

• win

ing Capacit city y / Net Debt 7,228 2,827 100 200 300 400 500 600 700

ONGOING

• Further action on cost including reduced

working hours, salary sacrifice, headcount reductions

• Plans developed against range of

economic scenarios

• Material longer term efficiency potential

15

EXTENSIVE PROGRAMME OF ACTIONS TO PROTECT BUSINESS AND PEOPLE FROM COVID-19 IMPACT

COST

• Hiring freeze, freelancer review, delays

to pay rises and stopping discretionary spend

• Exec and Board salary sacrifice
• In-year impact of £700-800m

CAPEX AND WORKING CAPITAL

• £100m reduction in capex budget
• Continuous review of working capital

movements

• Significant self-help opportunity remains

SHAREHOLDER RETURNS

• Kantar buyback suspended with £330m
• ut of £950m completed
• 2019 final dividend suspended
• Immediate cash saving of £1.1bn

BUSINESS UPDATE

17

OUR PRIORITIES

FIRST QUARTER 2020 TRADING UPDATE

PEOPLE PEOPLE CLIENTS COMM COMMUNITIES UNITIES

PEOPLE: EFFECTIVE RESPONSE TO ”LOCKDOWN”

WO WORKIN RKING G REM REMOTELY OTELY

95% of our people

REGU REGULA LAR R SUPP SUPPORT ORT

• WPP Town Halls

by Market

• CEO and team

communications

• WPP TV
• Mental wellbeing

a particular focus

PROTECT PROTECT JO JOBS BS WH WHERE EREVE VER POSSI POSSIBL BLE

• Over 3,000 people
• n salary sacrifice
• Internal jobs

market

• Upping training

and development with our partners

18 FIRST QUARTER 2020 TRADING UPDATE

84% of consumers will judge companies by how they respond

19

CLIENTS: RAPID ACTION TO RE-PLAN AND COMMUNICATE

FIRST QUARTER 2020 TRADING UPDATE

RELEVANT RELEVANT COMM OMMUNIC NICAT ATIONS IONS 84% of consumers will judge companies by how they respond RE RE-PLAN PLANNIN NING G COMM COMMUNIC UNICAT ATIONS IONS

• Responding quickly, working

faster

• Re-planning media to higher

ROI channels

• Production ongoing with CGI,

stock, animation

20

HUGE RANGE OF CLIENT WORK

FIRST QUARTER 2020 TRADING UPDATE

21

CLIENTS: RE-ALLOCATING MEDIA AND ACTIVITY FOR ROI

• Digital media to drive sales
• Digital in severely impacted sectors
• Newspapers, magazines, cinema, outdoor
• TV and radio
• National TV (hard to shift)
• Earned and paid social media channels

FIRST QUARTER 2020 TRADING UPDATE

Automotive 15% Luxury, Premium 5% Travel, Leisure 4%

22

CLIENT DIVERSIFICATION

Note: all figures relate to WPP’s top 200 designated clients attributable to each industry for continuing

• perations. These comprise 57% of WPP total revenue less pass-through costs, and 81% of total designated clients

for Q1 2020. Growth figures are Q1 2020 top 200 clients year-on-year on a like-for-like basis.

FIRST QUARTER 2020 TRADING UPDATE

SI SIGN GNIF IFICAN ICANTL TLY Y IMPACTE IMPACTED

24% 24%

BAL BALANCED ANCED RESPON RESPONSE SE

22% 22%

MORE MORE RESILIENT RESILIENT

54% 54%

• 4.0% in Q1

Telco, Media, Ent 7% Retail 6% Financial services 4% Other 5%

+4.0% in Q1

CPG 25% Tech 16% Healthcare, Pharma 13%

+4.9% in Q1

23

WPP HAS A BROAD GEOGRAPHIC SPREAD

FIRST QUARTER 2020 TRADING UPDATE

China USA UK Germany Australia France Italy Spain India Brazil OUTBREA OUTBREAK RECOVERY RECOVERY

“What we’ve seen in China is a pretty quick bounce back for the consumption of beauty products” (L’Oreal, 16 April) “Shopping in stores has gradually picked up in China since early April” (LVMH, 16 April) “Sales in Louis Vuitton stores … are up about 50% in the past three weeks over the same period a year ago” (Bloomberg, 16 April)

CHINA: RAPID RECOVERY IN ECONOMIC ACTIVITY

• 21%
• 16%

3% 12%

Jan-Feb March

YoY

• Y online
• nline re

retail ail sale sales st strong

• ng

total

• nline

100% 5% 45% 55% 90%

Up to 23 Jan Lockdown 24/2-20/3 24/3-3/4 7/4-now

WPP WPP bac ack in the in the offi

• ffice

ce

• 96%
• 89%
• 83%
• 63%
• 50%
• 44%
• 40%
• 24%
• 35%

14%

Feb w1 Feb w2 Feb w3 Feb w4 Mar w1 Mar w2 Mar w3 Mar w4 Apr w1 Apr w2

YoY auto sales now growing

24 FIRST QUARTER 2020 TRADING UPDATE

COMMUNITIES: STRONGLY SUPPORTING GOVERNMENT AND NGO COMMUNICATION

25 FIRST QUARTER 2020 TRADING UPDATE

26

SHORT TERM FOCUS, INVEST FOR THE LONG TERM

FIRST QUARTER 2020 TRADING UPDATE

1 2 3 4

People Clients Communities Financial resilience Agility and Simplicity Creativity and Technology Culture and Purpose Operational effectiveness

IN INVES VEST T FAS ASTER TER FOR R THE THE FUTURE UTURE MANAGE OUR IMMEDIATE RESPONSE

1 2 3 4

OTHER FINANCIAL INFORMATION

28

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ BY REGION LIKE-FOR-LIKE %

• 1. Continuing operations

FIRST QUARTER 2020 TRADING UPDATE

• W. Cont.

. Europe % H1/19 H2/19 Q1/20

• 0.2

1.5

• 3.7

UK % H1/19 H2/19 Q1/20 1.2

• 0.5
• 4.2

% H1/19 H2/19 Q1/20 Mature Markets

• 3.8
• 1.8
• 2.8

Faster Growing Markets 1.1 1.8

• 4.6

Total

• 2.5
• 0.7
• 3.3

North h America % H1/19 H2/19 Q1/20

• 7.3
• 4.0
• 1.9

Africa a & M. East % H1/19 H2/19 Q1/20

• 3.6

6.6 7.3 Latin n America a % H1/19 H2/19 Q1/20 9.5 8.1

• 2.0
• C. & E. Europe %

H1/19 H2/19 Q1/20 5.3 5.2 4.7 Asia a Pacifi fic % H1/19 H2/19 Q1/20

• 0.9
• 1.3
• 8.6

29

BRIC MARKETS

1. Like-for-like growth vs prior year from continuing operations 2. Includes Hong Kong and Taiwan

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ 2020 March

• 33.0%
• 29.9%
• 16.7%
• 1.1%

0.7% 2020 Q1

• 23.4%
• 21.3%
• 1.3%

6.1% 11.5% 2019 FY

• 4.0%
• 3.8%

9.3% 9.7% 7.9% Mainland China Greater China² Brazil India Russia

Headcount

7,000 9,000 5,000 8,000 1,000

FIRST QUARTER 2020 TRADING UPDATE

30

CLIENT SECTOR MIX

% of total top 200 designated clients attributable to each industry for continuing operations. These comprise 57% of WPP total revenue less pass-through costs, and 81% of total designated clients for Q1 2020

CPG 25% Automotive 15% Tech 16% Healthcare & pharma 13% Telecom, media & entertainment 7% Retail 6% Other 5% Financial services 4% Luxury & premium 5% Travel & leisure 4%

FIRST QUARTER 2020 TRADING UPDATE

1.2%

• 0.3%
• 1.0%
• 3.8%
• 0.4%
• 1.4%
• 4%
• 2%

0% 2%

19/FY Act 20/Q1 Act 20/Q2 Est 20/Q3 Est 20/Q4 Est 20/FY Est

31

IMPACT OF FX ON REVENUE LESS PASS-THROUGH COSTS¹

• 1. Continuing operations

2.Latest exchange rates £:$1.24, £:€1.15

• 2020 Q1 currency

headwind -0.3%

• 2020 full year

headwind -1.4% at latest exchange rates²

• 2019 full year currency

tailwind 1.2%

FIRST QUARTER 2020 TRADING UPDATE

32

EFFECTS OF CURRENCY

1. Effects of currency on continuing operations

2020 2020 201 2019 STE TERLI RLING NG (WE (WEAK AKER) R)/S /STRONGER TRONGER

US$ 1.28 1.30

• 2%

€ 1.16 1.15 1% Chinese Renminbi 8.9 8.8 1% Brazilian Real 5.70 4.90 16% Australian $ 1.95 1.83 7% Canadian $ 1.72 1.73

• 1%

Indian Rupee 93 92 1% Singapore $ 1.77 1.76 1% South African Rand 19.6 18.2 8%

• Currency movements

accounted for 0.3% decrease¹ in revenue less pass-through costs

• Reflects overall strength
• f £ sterling against

most currencies except US$

FIRST QUARTER 2020 TRADING UPDATE

THANK YOU

THANK YOU