WPP shares soar as ad giant defies fears of marketing slowdown

London-based communications and advertising firm WPP has seen its shares soar over five per cent this morning after the group posted stellar earnings for 2022. 

The firm saw its revenues soar 13 per cent to £14.4bn in 2022, up from £12.8bn in the same period last year, assuaging fears that companies would pull back marketing spending amid economic volatility.

Pre-tax profit also jumped 22 per cent to £1.16bn, up from £951m the year before. 

WPP, which operates globally, has worked on a number of high profile accounts including Coca-Cola, which appointed the firm in 2021 to help execute a new marketing model. 

The group, which employs some 109,000 staff, also said that over £1.1bn was  returned to shareholders in 2022, comprising £807m of share buybacks completed and £365m of dividends paid. 

Forecasting ahead, the firm expects like-for-like revenue to grow three to five per cent in 2023, representing a deceleration in growth on last year.

While shares got a welcome boost from the positive results, rising as much as 5.6 per cent in early morning trading, they remain near 10 per cent down on the year.

Commenting on the year, WPP boss Mark Read said: “We enter 2023 in a strong financial position with good momentum from new business and the many opportunities ahead of us. 

“While there will no doubt be challenges, the continued need for major companies to build brands, sell products, reinvent and transform their business, understand their data, invest in technology and exploit the potential of AI remains, as does their need for modern partners who can help them navigate this new world.”

Russ Mould, investment director at AJ Bell, said investors could take “encouragement from the unexpectedly sunny outlook” from WPP.

“Before anyone gets too excited growth is still set to decelerate in 2023, but not as much as analysts had feared. The company is proving successful at reducing costs and any concern about the size of its debt pile is assuaged by an eye-catching increase in the dividend,” he said.

“While Mark Read is unlikely to receive too many garlands for his performance, given the shares are lower than when he started as CEO in 2018, he does deserve credit for stabilising the business in the wake of founder Martin Sorrell’s acrimonious departure and seeing it through the pandemic and a continuing structural shift in the advertising market.”