WPP share price: Group posts Q1 trading update

Like-for-like revenue up 0.2%

WPP share price: Group posts Q1 trading update

WPP (LON:WPP) has posted a quarterly trading update this morning.

Highlights from the company statement:

Quarter 1 highlights

n Revenue growth of 16.9%, with constant currency growth of 3.6%, like-for-like growth of 0.2%, 3.4% growth from acquisitions and 13.3% from currency, primarily reflecting the weakness of sterling against the US dollar, the euro and other major currencies

n Net sales growth of 18.5% in sterling (up 2.6% in dollars, up 6.3% in euros and down 1.1% in yen), with constant currency growth of 4.8%, like-for-like growth of 0.8%, 4.0% growth from acquisitions and 13.7% from currency

n Like-for-like revenue growth in all regions and business sectors, except North America and data investment management, characterised by particularly strong growth geographically in the United Kingdom, Western Continental Europe, Latin America and Central & Eastern Europe and functionally in public relations and public affairs and sub-sector digital, eCommerce & shopper marketing - the renamed direct, digital and interactive sub-sector

n Like-for-like net sales growth of 0.8%, with all regions and sectors, except North America and data investment management, showing growth. The delta compared to revenue growth reversing, as it did in the second half of 2016, as the Group's investment in technology enhanced the growth of advertising and media investment management net sales and as data investment management direct costs have been reduced

n Constant currency average net debt in the first quarter increased by £453 million to £4.544 billion compared to the same period in 2016. This continued to reflect significant net acquisition spend and dividends of £1.320 billion in the twelve months to 31 March 2017, and the impact of the debt acquired on the merger with STW in Australia of approximately £150 million, more than offsetting the improvements in working capital seen in the second half of last year and first quarter of this year

n Net new business of $2.103 billion in the first quarter, compared to $1.779 billion in the first quarter last year, with the Group first or second in net new business league tables year to date

Current trading and outlook

n FY 2017 quarter 1 preliminary revised forecasts | Similar to budget, with like-for-like revenue and net sales growth of around 2%, with the second half stronger reflecting weaker comparatives and a headline net sales margin target of 0.3 margin points improvement on a constant currency basis

n Dual focus in 2017 | 1. Revenue and net sales growth from leading position in horizontality, faster growing geographic markets and digital, premier parent company creative and effectiveness position, new business and strategically targeted acquisitions; 2. Continued emphasis on balancing revenue growth with headcount increases and improvement in staff costs/net sales ratio to enhance operating margins

n Long-term targets | Above industry revenue growth, due to effective implementation of horizontality, geographically superior position in new markets and functional strength in new media, data investment management, including data analytics and the application of new technology, creativity and effectiveness; improvement in staff costs/net sales ratio of 0.2 or more depending on net sales growth; net sales operating margin expansion of 0.3 margin points or more on a constant currency basis, with an ultimate goal of almost 20%; and headline diluted EPS growth of 10% to 15% p.a. from revenue and net sales growth, margin expansion, strategically targeted small- and medium-sized acquisitions and share buy-backs

As of 07:36 BST, Thursday, 27 April, WPP PLC ORD 10P share price is 1,724.00p.

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