WPP reported net revenues of approximately $3.45 billion in the third quarter, up about 13% with organic revenue growth (which excludes currency and M&A impact) of 3.8% in the third quarter.
WPP CEO Mark Read called Q3 performance “strong” as the company tweaked its full-year growth outlook to the top end of its previous guidance of 6% to 7%. Now the company says growth for the year will fall between 6.5% and 7%.
But investors focused on the company’s slight tempering of its full-year profit margin outlook and sent shares down 3% on the London Exchange Thursday.
The company had previously said it expected margin improvement of about 0.05% but today modified that to a range of between 0.03% and 0.05%. China lockdowns and staff cost increases of between 6% and 7% were cited as reasons for the revised outlook.
For the first nine months the company posted revenue of $9.85 billion, up 10.2% with organic growth of 6.6%.
All but one of the company’s regions showed growth including North America (+4.7%) and the UK (+4.2%).
Western Europe posted an organic revenue decline of 2.1%.
The company achieved net new business of $1.7 billion (billings) including assignments from Nestle, Samsung and SC Johnson. It cited COMvergence tallies that GroupM led new business wins and retentions through the first half of the year.
Read also gave a shoutout to Ogilvy for making significant progress in its turnaround effort. WPP CFO John Rogers said that on average the Group’s creative agencies averaged 5.2% growth in the quarter and that Ogilvy surpassed that, while Wunderman Thompson was “a little behind” and VMLY&R is having a “tougher year” after two years of significant growth. AKQA posted double-digit growth in the quarter as did production operation Hogarth.
The company is on track with its transformation cost savings and through the end of this year will record $350 million in permanent savings attributable its multi-year business transformation program. It expects to achieve close to $700 million in savings by 2025 or 2026.
Read told investors and analysts on an earnings call that “client spending remains strong” and that the “net mood does remain positive” among clients.
Read noted that two major packaged goods clients recently said they plan to increase spending above previously planned levels in the fourth quarter.
“Net net,” said Read, the company’s Q3 performance “demonstrates the resilience of our business.” He added, “we’re a different business than we were five years ago,” with much stronger capabilities in commerce, data and technology that are required for the kinds of integrated services major clients are looking for today.