WPP PR arm rebounds in Q2 with like-for-likes up 12.9 per cent

WPP's PR division reported like-for-like revenue growth of 12.9 per cent in the second quarter of 2021 versus the same period last year, with double-digit growth in all parts of the PR business on a like-for-like basis.

WPP PR arm rebounds in Q2 with like-for-likes up 12.9 per cent

Half-year like-for-like revenue growth was 7.4 per cent in the division, which includes Burson Cohn & Wolfe, Hill+Knowlton Strategies and Finsbury Glover Hering. Trading in the division was ahead of pre-pandemic levels - like-for-like revenue in H1 was up 2.6 per cent versus the same period in 2019.

Overall revenue in the PR business grew 4.3 per cent in Q2 2021 to £224m, and +0.7 per cent in the first half to £429m (the figures exclude 'pass through' costs).

WPP said of the PR division: "All parts of the business grew double-digits like-for-like in the second quarter, with Finsbury Glover Hering being the strongest performer."

Headline operating profit in the PR arm fell, however, from £72m in the second quarter of 2020 to £63m in the same period this year. Margin dipped from 16.9 to 14.8 per cent. WPP said the margin was affected by the "relatively strong prior-year performance, investment in people and merger-related costs".

The performance of the PR business compares to a particularly challenging Q2 last year with the onset of the coronavirus pandemic. Like-for-like revenue in the PR arm in the second quarter of 2020 fell 7.5 per cent.

The PR division rebounded less strongly than other parts of WPP's business in the second quarter of 2021, however. Like-for-like revenue growth in Q2 was 19.2 per cent in the Global International Agencies division, and 27.8 per cent in Specialist Agencies.

In recent weeks, other major holding companies have reported a strong rebound in their PR businesses. Omnicom Group's PR agencies reported a 15.1 per cent organic revenue increase to $345.9m in Q2, while the PR firms in Interpublic Group’s Dxtra network registered double-digit growth on both an as-reported and organic basis in the quarter.

Across WPP, the group said it has returned to 2019 trading levels a year ahead of its plan.

Like-for-like revenue excluding pass-through costs rose 19.3 per cent in Q2 2021. Growth was particularly strong in the UK (31.8 per cent), India (30 per cent) and Germany (20.3 per cent), while the US reported like-for-like growth of 12.6 per cent. Growth was 8.4 per cent in Australia and 1.4 per cent in Greater China.

In comparison to Q2 2019, like-for-like revenue growth across the business was 1.3 per cent.

In the first half of 2021, revenue excluding pass-through costs grew 11 per cent on a like-for-like basis, or five per cent overall, to £4.9bn. Headline operating margin increased 3.9 points to 12.1 per cent in H1, with WPP citing "strong topline growth supporting significant reinvestment in incentives".

WPP raised its interim dividend by 25 per cent and announced plans for share buybacks worth £600m in 2021.

Chief executive Mark Read said: “I’m delighted with our performance in the first six months of the year, at a time when COVID-19 continues to take a toll on many countries. The like-for-like revenue less pass-through costs growth rate of 19.3 per cent in the second quarter is our highest on record, as clients reinvest in marketing, particularly in digital media, ecommerce and marketing technology. We have returned to 2019 levels in 2021, a year ahead of our plan, with good momentum into 2022.

“We’ve also made very good strategic progress. Our recognition as the most awarded company at the 2021 Cannes Lions Festival reflects our investment in creative talent and the strength of our creative work over the past two years. Our focus on data, commerce and technology, through strategic acquisitions, organic investments and the launch of Choreograph, has supported a strong new business performance. Key assignment wins include AstraZeneca, Bumble, JP Morgan Chase and Pernod Ricard.

“In procurement, property and shared services, we are making strong progress as part of our overall transformation programme. We have significantly increased our incentive pools in the first half, to reflect the tremendous contribution of our people in these challenging times, and in line with our intention to reinvest in talent announced at our Capital Markets Day in December 2020.

“We expect our strategy to translate into benefits for all of our stakeholders: a powerful, modern offer to support our clients’ growth; a great place for our people to work; a positive contribution to communities and the environment; and good financial returns for shareholders, with the interim dividend raised 25 per cent and £600m of share buybacks planned in 2021.”

This article was updated on Thursday morning to include more data from WPP's results presentation.

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