WPP will pay £424m in annual bonuses, after reporting “strong” revenue growth of 6.9% and profit up 22%, and it forecast further “momentum” in 2023.

The world’s biggest advertising agency employer, which has more than 114,000 staff, offered cheer to investors as it expects revenues to increase 3% to 5% in 2023, in line with rivals but better than some analysts had expected.

WPP’s annual results showed growth on several key metrics in 2022 that built on the bounceback from the pandemic downturn in 2021.

Revenues less pass-through costs rose 6.9% to £11.8bn last year — in line with Interpublic (7.0%) but behind Publicis Groupe (10.1%) and Omnicom (9.4%). However, WPP’s comparatives were tougher because its organic revenue growth had been better than those rivals a year earlier.

Annual pre-tax profits climbed 22% to £1.16bn and the dividend was up 31%. In another sign of expansion, headcount increased by about 5,000 in 2022.

WPP’s return to growth follows four consecutive years of revenue decline between 2017 and 2020.

Mark Read, the chief executive of WPP, told Campaign that growth across the wider agency sector had shown that the fears of some commentators and analysts prior to the pandemic had been “overblown”.

WPP’s growth of 6.4% in Q4 2022 was faster than the “FAANG” tech giants, which grew an average of only 1.2%, he noted.

Looking across the full year, the flagship creative agencies grew 5% and the media arm, Group M, was up 9.1%.

Read said: “WPP delivered strong growth in 2022, despite the macro challenges, reflecting the priority placed by our clients on investing in communications, customer experience, commerce, data and technology.”

He added that “our transformation is now delivering measurable results” as the company has returned to growth, improved profit margin and reduced net debt.

“We enter 2023 in a strong financial position with good momentum from new business and many opportunities ahead of us,” Read said.

“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 [artificial intelligence] remains, as does their need for modern partners who can help them navigate this new world.”

WPP will pay “incentives” of £424m, down from a record £592m bonus payout a year earlier.

“2021 was an exceptional year and 2022 is a more normalised year,” Read explained — in a nod to how its organic revenue growth had been faster at 12.1% in 2021.

Staff incentives were £294m in 2019 and £185m in 2020.

WPP’s shares rose 3% in early trading to £10.50 and are up a quarter since the start of the year as fears about a global economic slowdown have eased.

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