M&C Saatchi has reported a 45 per cent decline in profits for the first half of 2023 and gave a “cautious view overall” on the second half of the year.
Lead image: Justin Graham, M&C Saatchi Australia CEO.
As a result, shares in the group tumbled seven per cent on the London Stock Exchange.
Net revenues also dropped by seven per cent and operating margins declined to 8.3 per cent from 14 per cent.
“Along with the wider market, we have seen a significant slowdown in technology client spend in our Media specialism and a slower pace of new business wins in the Advertising division. However, 85 per cent of the Company’s full year revenue forecast is now booked as at the end of August, marginally ahead of 84 per cent for the same time last year. Recovery is expected in the second half of the year,” said the holdco in a statement.
The company’s specialisms delivered £70.3 million (AU$135.38 million) up 0.9 per cent compared to 2022 while its Advertising division brought in £50.1 million (AU$96.48 million), down a whopping 16.1 per cent compared to last year. The specialisms were fueled by double-digit revenue growth in the Issues (up 20.6 per cent) and Passions (up 11.0 per cent) specialisms, underpinning their strong market position.
“The second half of the year is about growth, execution, and efficiency. Whilst some economic headwinds are likely to continue, we are focused on what we can control: continued connectivity of our business, elevating our highest-margin businesses in resilient segments, underpinned by tight cost management,” said Zillah Byng-Thorne, M&C’s executive chair.
M&C’s Australian business saw revenue declines year-on-year “as a result of challenging market conditions,” according to the holdco. Its British, German and Chinese arms also saw declines. However, the Australian business did manage to turn a £1.54 million (AU$2.96 million) operating profit.