M&C Saatchi shares tumble 5% as Australia slump drives profit, revenue drop in H1

Investing.com -- Shares of M&C Saatchi (LON:SAA) fell more than 5% on Thursday after the advertising group reported a decline in revenue and profit for the first half of 2025, citing weakness in Australia and client caution in a difficult economic environment.

Like-for-like net revenue for the six months to June 30 was £103.8 million, down 5.1% from £109.4 million a year earlier.

Statutory net revenue decreased 7.7% to £103.8 million from £112.4 million. Like-for-like operating profit dropped 36% to £10.3 million, while statutory operating profit fell 45.3% to £7.5 million. 

Profit before tax declined 48.1% on a like-for-like basis to £6.9 million and 60.2% on a statutory basis to £4.3 million.

Australia was the biggest drag on performance, with revenue down 26.5% due to reduced client spending and prior-year losses. 

Excluding Australia, group revenue was broadly flat, declining by 0.7%. The Middle East recorded growth of 46.6%, Europe rose 5.7%, Issues increased 6.3% and Media gained 5.4%. 

Consulting fell 16.8% and Passions and PR dropped 8.8%. Advertising revenue overall declined 9.5% but was down 2.5% when excluding Australia.

Chief executive Zaid Al-Qassab said the results reflected broader pressures on the industry.

“After a solid start to the year, we have not been immune to the market conditions of the wider industry, as clients reacted cautiously to the geo‐ political tensions and the unstable macro‐economic environment,” he said in a statement. 

“Excluding Australia, the Group would have been broadly flat which is testament to the strong underlying business fundamentals.”

The London-headquartered company said it took actions in Australia during the second quarter, including installing new leadership, closing an unprofitable media unit and restructuring to improve profitability. 

Adjusted net cash was £11.2 million, down from £12.9 million last year, supported by operating cash conversion of 137%. Basic like-for-like earnings per share declined to 4.2p from 7.8p.

Operating profit margin on a like-for-like basis was 9.9%, down from 14.7%. Statutory operating margin was 7.2%, compared with 12.2% a year earlier. Like-for-like EBITDA fell 29.6% to £13.8 million, while statutory EBITDA declined 36.6% to £11.1 million.

The group announced plans to deliver at least £12 million in annualised cost savings in 2025, with at least half expected this year.

Phase Two of its transformation program is now targeting £5 million in annual savings, up from £3 million, with restructuring in Australia contributing £7 million. 

Al-Qassab said the company acted quickly to accelerate savings “in order to maintain our investment in higher margin growth areas.”

M&C Saatchi confirmed it is targeting full-year profit in line with 2024, despite forecasting mid-single-digit revenue declines. 

The company said it continues to see momentum in new business, flagging recent client wins including Stockland, Screwfix, Lionel Messi energy drink Mas+, GoPuff and the U.S. Soccer Federation.