WPP, a London-based advertising group, recently reported a decline in pretax profit for 2023 due to a large impairment. However, the company highlighted the rapid growth of its AI-powered platform, WPP Open, which has seen an increase in its customer base.
Embracing AI Opportunities
With over 30,000 users utilizing the AI tool within the group, WPP continues to invest in AI opportunities, as outlined during its recent capital markets day. Chief Executive Mark Read emphasized the importance of AI for the business, stating that they are embracing the opportunities it presents by integrating it into their operations and client work.
Financial Overview
Despite the decrease in pretax profit to 346.3 million pounds from 1.16 billion pounds the previous year, WPP saw a headline pretax profit of 1.525 billion pounds when excluding exceptional items. This figure was slightly below the consensus of 1.54 billion pounds based on forecasts from eight analysts.
The company reported a goodwill impairment charge of 63.6 million pounds on closed businesses and 727.9 million pounds for the amortization and impairment of acquired intangible assets. Revenue, however, showed a positive trend, increasing by 2.9% to 14.84 billion pounds from 14.43 billion pounds.
WPP Reports GBP11.86 Billion in Revenue for 2023
WPP announced a total revenue less pass-through costs of GBP11.86 billion for the fiscal year 2023, marking a slight increase from the previous year’s GBP11.80 billion in line with market expectations.
Regional Performance Overview
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United States: The fourth quarter saw a 4.5% decline in like-for-like revenue less pass-through costs, attributed to reduced spending from technology, healthcare, and retail sectors.
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United Kingdom & India: These regions experienced growth, with revenue less pass-through costs up by 5.1% and 22%, respectively.
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Germany & China: However, Germany reported a 5.3% decrease, while China saw a 1.2% decline.
Outlook and Expectations
Looking ahead to 2024, WPP anticipates like-for-like growth in revenue less pass-through costs to range between 0% to 1%. Additionally, a headline operating margin improvement of 20-40 basis points is expected. In the medium term, the company aims for a headline operating profit margin of 16%-17%.
Dividend Declaration and Future Prospects
WPP announced a steady final dividend of 24.4 pence per share, maintaining consistency with the dividend policy. Chief Executive Officer Read expressed confidence in the company’s strategic direction and expressed optimism in achieving accelerated and profitable growth over the medium term.
For more information, visit WSJ.
