Stronger-than-expected guidance for 2023 and a big dividend increase helped lift advertising group WPP (WPP) in early trading on Thursday.
Advertising spend is often seen as a good indicator of the health of the economy and given the depth and breadth of its operations, a strong showing for WPP could be positive for wider investor sentiment.
The shares were up 3.8% to £10.56 as the company forecast organic growth of between 3%-5% in 2023.
The group also reported a pre-tax profit for the full year ending 31 December 2022 of £1.6 billion a rise of 17.3% compared with the same period last year of £1.37 billion.
Over the past six months, WPP shares are up nearly 40%. The results were at the top end of market expectations with organic growth of 6.9% in revenue less lass-through costs, with 6.4% growth in the final quarter.
WPP has been lifted by its recent transformation programme which generated gross annual savings of around £375 million against a 2019 base are ahead of the planned £300 million, with savings in property, procurement and ways of working, enabling additional investment in talent for growth areas.
DIVIDEND UP 30%
In 2022 £1.1 billion was returned to shareholders through £807 million of share buybacks and £365 million of dividends paid. WPP ifted its final dividend by 30.5% to 24.4p a share. Net debt was up materially to £2.5 billion.
WPP CEO Mark Read said: ‘WPP delivered strong growth in 2022, despite the macro challenges, reflecting the priority placed by our clients on investing in communications, customer experience, commerce, data and technology.
‘We enter 2023 in a strong financial position with good momentum from new business and the many opportunities ahead of us. While there will no doubt be challenges, the continued need for major companies to build brands, sell products, reinvent and transform their business, understand their data, invest in technology and exploit the potential of AI remains, as does their need for modern partners who can help them navigate this new world.’
WINNING NEW BUSINESS
WPP said it saw healthy growth in most major markets with advertising spend in the UK and US up 7.1% and 8.9% respectively. In China, WPP saw a fall in advertising spend as a result of lockdown restrictions.
The advertising giant has also managed to win $5.9 billion of new business, including Audible, Danone, SC Johnson and Verizon, as well as being recognised for creativity, as the most awarded company at the 2022 Cannes Lions Festival, the leading industry event, for the second year running.
