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M&C Saatchi: ‘Significant improvement’ in profitability as problems ease

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Retail Reporter

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Business investment could bounce back up to 4.8 per cent this year, a new forecast has suggested.
Business investment could bounce back up to 4.8 per cent this year, a new forecast has suggested.

Ad agency M&C Saatchi said that cost-saving measures had contributed to a much-improved performance in the first half of the year, adding that it was “excited” about the future.

The company told markets this morning that revenue grew by six per cent in the six months to 30 June, with 12.9 per cent growth in the UK and 47.6 per cent growth in the Middle East.

The company said profitability improved “significantly ” due to “the global cost efficiency program, local cost actions [and] loss-making business exits.”

Operating profit grew by 40 per cent over the period, and like-for-like profit before tax grew by 26 per cent.

Statutory earnings per share were at 6.4p, from a loss of 5.2p in the first half of 2023.

The company struggled in 2023 as client marketing budgets were squeezed amid the cost of living crisis.

Media stalwart Zillah Byng-Thorne, the former CEO of media group Future, was bought to stabilise the ship in June 2023 as executive chair and acting CEO after former CEO Moray MacLennan ended a decades-long association with the firm.

M&C Saatchi said that it was on track to deliver savings of £10m by the end of 2024, on top of £8.4m saved in the last two years.

In February this year, Zaid Al-Qassab was appointed to take over as boss.

Zaid Al-Qassab, chief executive officer, said: “We continue to make great progress in building a strong platform to deliver sustainable organic growth through our self-help initiatives and wider transformation.

“Our increasingly diversified revenue provides greater resilience against macro volatility, and our higher-margin businesses continue to be our highest growth contributors. Whilst there is always more to do, we are excited about the further potential we can unleash.

“Looking forward, despite continued volatility within our markets, we are confident that we are on track to deliver against market expectations for 2024, whilst noting the tougher second half comparators.

“We will continue to deliver on our cost saving programme whilst also making strategic investments in the second half of the year to underpin our ambition of long-term sustainable growth and delivering strong returns for shareholders,” the new CEO summarised.

Chris Bottomley, Equity Analyst at Shore Capital, said: “Despite market volatility,  its diversified  portfolio  and regional-first approach have provided resilience,  and management remains confident in meetingFY24Fmarket expectations.”