By Kate Holton
LONDON (Reuters) -WPP, the world’s largest advertising group, said client demand for campaigns to justify price rises and maintain their recovery from the pandemic would enable it to grow above historic levels and return more cash to investors.
The owner of the Ogilvy, Grey and GroupM agencies surpassed forecasts for its main net sales measurement and expanded its margins in 2021, while cost cuts boosted the balance sheet and enabled it to launch a new $1.1 billion buyback for 2022.
Advertising holding companies such as WPP, Omnicom Publicis and IPG have been in the vanguard of a corporate pandemic recovery as clients use their data, creative skills and strategic advice to produce and place new ad campaigns.
Additional non-communication work has also helped pull the ad sector out of a period of stagnation that pre-dated the pandemic, as clients increasingly use them to build e-commerce platforms or digitise their businesses.
For 2022, the group is also likely to benefit from the global rise in inflation, as clients need to spend on marketing to explain and back their price rises.
It won $8.7 billion of net new billings in 2021, and has recently benefited from retaining or winning new work from the likes of Unilever, Google and Coca-Cola.
Chief Executive Mark Read, who replaced founder Martin Sorrell at the top of WPP in 2018 when the group was on a downward trajectory, said the highly cash-generative business was now outperforming peers and he entered 2022 with confidence.
Analysts at Citi and Shore Capital described the results as strong but its shares, up 36% in the last year, were down 5% in a FTSE 100 down almost 3% after Russia invaded Ukraine.
WPP said its main net sales metric – like-for-like revenue less pass-through costs – had risen by 12.1% in 2021, compared to an upgraded October forecast of 11.5% to 12%, driven by demand in the United States, Britain and China.
For 2022 it forecast growth of around 5%.
“We feel that the company is in a very strong position,” Read told Reuters.
(Reporting by Kate HoltonEditing by William Schomberg)
