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Philip Lader

Philip Lader. Chairman. Sir Martin Sorrell. CEO, WPP. Strategic Priorities. Short term: to continue to balance changes in revenues against staff costs and headcount Medium term: to continue the integration of TNS within Kantar

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Philip Lader

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  1. Philip Lader Chairman

  2. Sir Martin Sorrell CEO, WPP

  3. Strategic Priorities • Short term: to continue to balance changes in revenues against staff costs and headcount • Medium term: to continue the integration of TNS within Kantar • Long term: to continue to develop our business in the faster-growing geographic areas of Asia Pacific, Latin America, Africa and the Middle East, and Central and Eastern Europe and in the faster-growing functional areas of marketing services, particularly direct, internet, interactive and consumer insight – that is, new markets, new media and consumer insight

  4. Key Priorities, Objectives and Strategy • Faster growing markets to be one third of total group against approximately 27%¹ now (31%¹ including 100% of associates) • Marketing services including new media to be two thirds of total group against approximately 61%¹ now • Quantitative disciplines, basically consumer insight, to be one half of total group against approximately 38%¹ now ¹ Based on full year 2008 reported revenue adjusted to include a full year of TNS

  5. Key Priorities, Objectives and Strategy Faster Growing Markets to be One Third of Total Group Faster growing markets including Central & Eastern Europe 27% Today¹ Today including associates¹ Tomorrow Europe Central & Eastern Europe North America Asia Pacific, Latin America, Africa & Middle East ¹ Based on full year 2008 reported revenue adjusted to include TNS for a full year

  6. Key Priorities, Objectives and Strategy WPP’s Performance¹ Strong in BRIC Markets Revenue $’m 800 700 Associates @ 100% 600 500 400 300 200 100 0 2000 2007 2008 2000 2007 2008 2000 2007 2008 2000 2007 2008 China (including Hong Kong and Taiwan) Brazil India Russia ¹ 2008 adjusted to include a full year of TNS

  7. Key Priorities, Objectives and Strategy WPP’s Performance¹ in Other Faster Growing Markets Revenue $’m 700 600 Associates @ 100% 500 400 300 200 100 0 2000 2007 2008 2000 2007 2008 2000 2007 2008 2000 2007 2008 Middle East Eastern Europe Indonesia Vietnam ¹ 2008 adjusted to include a full year of TNS

  8. Key Priorities, Objectives and Strategy Revenue by Geography $15.4bn Asia Pacific, LatAm, Africa & Middle East $13.4bn Europe 3.6 1.5 N America 4.8 6.8 $7.0bn $6.9bn 1.3 1.3 1.8 2.6 7.1 $2.3bn $2.3bn 5.1 0.2 3.9 1.7 2.9 1.3 0.7 0.6 WPP Omnicom IPG Publicis Havas Aegis 1 Source: WPP - sterling revenues converted @ $1.85= £1 based on the average for 2008, adjusted to include a full year of TNS. Omnicom, Publicis and Havas - company presentations for 2008. 2 FX. Havas and Publicis assumes $1=€0.68 based on the average for 2008. 3 OMC. Assumes “non Euro currency” Europe, ie Switzerland, Turkey, Norway, Denmark, Sweden and Eastern Europe are ca 3% of revenue and Canada is 1.5% of revenue. 4 IPG. Assumes Canada is ca 1.5% of revenue. 5Rest of World. Asia Pacific, Latin America, Middle East and Africa. 6Aegis. EMEA and Asia = $1.7 bn

  9. Key Priorities, Objectives and Strategy Marketing Services to be Two Thirds of Total Group Today¹ Today including associates¹ Tomorrow Marketing Services Advertising & Media Investment Management ¹ Based on full year 2008 reported revenue adjusted to include a full year of TNS

  10. Key Priorities, Objectives and Strategy Revenue by Discipline $15.4bn Marketing Services $13.4bn Advertising Media 9.5 7.6 $7.0bn $6.9bn 2.5 2.9 3.6 4.7 $2.3bn $2.3bn 2.6 2.6 0.8 0.9 1.0 2.3 1.8 1.4 1.4 1.1 0.5 WPP Omnicom IPG Publicis Havas Aegis Source: 1 WPP sterling revenue converted at $1.85=£1 based on the average for 2008, adjusted to include a full year of TNS. 2 2008 Company Presentations; Aegis consensus estimate. 3 Media split based on Deutsche Bank estimates. 4 FX. Havas and Publicis assumes $1=€0.68 based on the average for 2008.

  11. Key Priorities, Objectives and Strategy Quantitative Disciplines to be One Half of Total Group Today¹ Today including associates¹ Tomorrow Information, Insight & Consultancy andDirect, Internet & Interactive Advertising, Media Investment Management & Other Marketing Services ¹ Based on full year 2008 reported revenue, adjusted to include a full year of TNS

  12. Key Priorities, Objectives and Strategy Quantitative Disciplines to be One Half of Total Group • Information, Insight & Consultancy to represent over $4 billion including TNS • Creates second largest Information, Insight & Consultancy group globally • Creates fourth largest business information group globally Information, Insight & Revenue Revenue Information Services Rank Rank Companies 2007 ($m) Consultancy Groups 2007A ($m) 1 Thomson Reuters 8,919 1 Nielsen 4,707 2 Nielsen 4,707 2 Kantar/TNS 4,030 3 Bloomberg 4,700 3 IMS 2,193 4 Kantar/TNS 4,030* 4 GfK 1,593 5 IMS 2,192 5 Ipsos 1,271 6 Experian 2,020 6 Synovate 867 7 McGraw-Hill 1,802 7 IRI 665 (1) 8 Westat 426 8 Reed Elsevier 1,753 (1) 9 Arbitron 338 9 Equifax 1,696 Source: Company filings (1) 2006A from Honomichl Source: The Research Ratings Business Information 100, October 2008 *Kantar/TNS based on Company filings

  13. Key Priorities, Objectives and Strategy WPP¹ Position in Direct, Internet and Interactive +14% vs 2007 +21% vs 2007 ¹ 2008 revenues are adjusted to include a full year of TNS. ² Defined to include total revenue from Direct, Digital and Interactive Networks from all sources.

  14. Key Priorities, Objectives and Strategy 2008 Digital Revenue $ Billions 3.9 2.2 1.3 1.0 0.4 0.3 WPP1 Omnicom2 IPG2 Publicis3 Havas3 Aegis3 Source: ¹ WPP is “wide” definition, adjusted to include a full year of TNS. ² Ad Age %s applied to FY US$ revenue. 3 Company Disclosure.

  15. Strategic Objectives We continue to focus on our key objectives • Improving operating margins • Increasing flexibility in the cost base • Using free cash flow to enhance share owner value, and improve return on capital employed • Developing role of parent company • Emphasising revenue growth more as margins improve • Improving creative capabilities and reputation of all our businesses

  16. Historic Headline PBIT¹ and Margins PBIT1 £’m PBIT1 margin % Long-term IFRS target 19% 2008 including full year of TNS 14.3% • Headline PBIT excludes finance income/ costs, taxation, goodwill and intangibles charges, investment gains, and share of exceptional gains of associates. For 2004 onwards, Headline PBIT has been prepared under IFRS. 2003 and prior periods are in accordance with previous UK GAAP.

  17. Financial Model • Revenue growth in line with the market (0%-5%) • Operating margin up 0.5 margin points each year • PBIT growth of 5%-10% per annum • Use of free cash to repay debt and small to mid sized acquisitions up to £100m in 2009 and 2010 • Target EPS growth of 10%-15% per annum

  18. Results for 2008 - Earnings and EPS¹ Earnings (£m) 2004 UK GAAP IFRS 700 55.5p 21% 9% 600 45.8p 42.0p 17% 500 36.0p 32.3p 29% 11% 400 27.9p 29.0p 300 200 100 0 2003 2004 2005 2006 2007 2008 ¹ Diluted Headline Earnings and Diluted Headline EPS

  19. Increasing flexibility in the cost base • We continue to focus on a more flexible cost structure inthree key areas: • Staff c. 57% of revenue • Property c. 7% of revenue • Bought in services c. 21% of revenue • Increased flexibility in all areas are important to combateconomic slowdown

  20. Increasing flexibility in the cost base Change in variable costs %

  21. Using Free Cashflow to Enhance Share Owner Value Acquisitions • Continue to focus on faster growing geographical areas and marketing services, particularly direct, internet & interactive and information,insight & consultancy • During 2008 24 small and mid sized acquisitions were completed in executing this strategy • Acquisitions in advertising are used to address specific client or local agency needs • We continue to find opportunities at earnings enhancing multiples, particularly outside the US • Acquisition of TNS successfully completed in October 2008

  22. 2008 second interim dividend raised by 12.6% to 10.28p per share Distributions to share owners: Using Free Cashflow to Enhance Share Owner Value ¹ Of which 4.6% relates to share cancellations

  23. Key Priorities, Objectives and Strategy Using Free Cashflow to enhance share owner value distributions to share owners¹ £ millions 6.6% 4.8% 4.7% 3.6% 2.7% 2.0% 1.6% ¹ Sum of share buybacks and dividends paid divided by average shares in issue for the relevant period, as a % of the average share price for the relevant period

  24. Outlook • The unprecedented financial crisis has triggered recession across globe • Our revised forecasts show mid single-digit like-for-like revenue decline, and it will be difficult to maintain margins at 2008 level (including a full year of TNS) • 2009 will be a very difficult year, particularly in first half and we are taking necessary steps to deal with any revenue downturn • By 2010 we believe impact of massive global fiscal and monetary injections and corrections should bring a recovery of sorts

  25. Conclusions • The Group continues to be well placed by region and discipline to benefit from key industry trends • The TNS acquisition represents a major competitive advantage for our Information, Insight & Consultancy or consumer insight business and the Group, as well as a source of margin improvement • In the long term the Group will be concentrating on positioning its top line in the highest growth functional and geographic sectors and improving the effectiveness of its cost structure • The Group will manage cashflow to return average net debt/EBITDA ratio to below 2x in the medium term • As the world exits from the financial crisis, whenever that is, the Group’s strategic focus on new geographical markets, new media and the application of technology and consumer insight, will prove to be even more effective

  26. WPP Today WPP Revenue £7.5bn¹ PBIT £1,118m Advertising Media Investment Management Information, Insight & Consultancy Public Relations & Public Affairs Branding & Identity, Healthcare and Specialist Communications WPP Digital Revenue £3.3bn PBIT £581m Revenue £1.3bn¹ PBIT £148m Revenue £752m PBIT £125m Revenue £2.1bn PBIT £264m Revenue Broader £1.9bn (c 25%) Revenue and PBIT figures are 2008 reported sterling actuals PBIT isstated before goodwill and impairment, fixed asset gains and investment write-downs ¹ Adjusted to include TNS revenue for full year 2008, WPP revenue is £8.6bn & Information, Insight & Consultancy revenue is £2.4bn

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