WPP Plc (LON:WPP) is updating the market today on H1 trading and the FY 2025 outlook. Against a challenging economic backdrop, we have seen a deterioration in performance as Q2 has progressed. We now anticipate H1 like-for-like (LFL1) revenue less pass-through costs to decline by -4.2% to -4.5%, with a decline of -5.5% to -6.0% in Q2 which, although impacted by one-off factors, is below our expectations. We expect the lower revenue less pass-through costs, coupled with severance action at WPP Media, to result in H1 headline operating profit2 in the range of £400m to £425m, which is consistent with a margin decline of 280 to 330 bps year-on-year (excluding FX).
With the expectation of continued macro uncertainty weighing on client spend and weaker net new business than originally anticipated, we are reducing our guidance for 2025 LFL revenue less pass-through costs to -3% to -5% and now expect a year-on-year decline in headline operating profit margin of 50 to 175 bps (excluding FX) reflecting benefits from continued action on costs.
Mark Read, Chief Executive Officer of WPP, said:
“Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business. While we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated and we expect this pattern of trading in the first half to continue into the second half.
“As a result, we are updating our guidance for the full year and reducing our expectations on LFL revenue less pass-through costs growth to -3% to -5% (from flat to -2%) with a year-on-year decline in headline operating profit margin of 50 to 175 bps (vs. around flat previously).
“Our focus remains on ensuring the right balance between investing in the business for the long-term and continuing to reduce structural costs, while taking appropriate actions to respond to the current trading environment.”
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1. Like-for-like. LFL comparisons are calculated as follows: current year, constant currency actual results (which include acquisitions from the relevant date of completion) are compared with prior year, constant currency actual results, adjusted to include the results of acquisitions and disposals for the commensurate period in the prior year.
2. Management believes these non-GAAP measures, including like-for-like, revenue less pass-through costs and headline profit measures, are both useful and necessary to better understand the Group’s results. Details of how these measures are calculated are detailed in the 2024 Preliminary Results RNS, 27 February 2025.
H1 2025 performance
• H1 revenue less pass-through costs – We expect H1 revenue less pass-through costs to be around £5.0bn, which is consistent with a LFL decline of -4.2% to -4.5%. This implies a Q2 LFL decline in revenue less pass-through costs of -5.5% to -6.0%.
• Business segments and regions – We saw a quarter-on-quarter deterioration in North America which we expect will be down low single digits across H1. Other regions have remained weak despite an easing comparative. By segment, Global Integrated Agencies has seen a step down from Q1 and is expected to decline mid-single digits in H1, with lower client spend and net new business impacting WPP Media and Ogilvy in particular.
• Headline operating profit – The lower than expected revenue less pass-through costs, coupled with the severance action at WPP Media, is expected to result in headline operating profit in the range of £400m to £425m for H1, consistent with a headline operating profit margin of 8.0% to 8.5%, down 280 to 330 bps year-on-year (excluding FX).
• 2025 Interim Results – WPP will report interim results on 7 August 2025.
Financial outlook for 2025
• LFL revenue less pass-through costs – Our original guidance of flat to -2% anticipated an improvement in the sequencing of net new business through the year and some scope for deterioration in the macro environment. With the macro environment weighing more heavily on client spending and less support from net new business (including pull forward of losses originally anticipated in 2026), we are updating our FY guidance for LFL revenue less pass-through costs to -3% to -5%, consistent with limited improvement from H1.
• Headline operating profit margin – We continue to take action on costs, and expect these to deliver an improved margin in the second half. We expect severance actions taken in the second quarter at WPP Media to have a broadly neutral impact for the full year and generate £150m+ of annualised gross costs savings. That said, with LFL revenue less pass-through costs expected to be down more than our original guidance range, we believe there will be a trade off between holding the full year margin and continuing to make appropriate investment in the business. Reflecting this, we now assume a decline in headline operating profit margin of 50 to 175 bps (excluding FX).
• Additional guidance – We will update on other 2025 financial indicators at our interim results in August.
