Credit: Quino Al via Unsplash
M+C Saatchi reported negative revenue and falling profit, as the "poor performer" Australia dragged on the global advertising group's operations.
Like-for-like net revenue was down 5.1% to GBP 103.8 million for the half year to June. Operating profit fell 36% to GBP 10.3 million.
The company, given continuing macro headwinds as well as the "significant drag of the Australian business," expects full year revenue to be slide by about mid-single digits and profit to be flat on last year.
This is despite the improving pipeline momentum in the second half of the year.
Excluding Australia, which fell by 26.5%, group like-for-like net revenue was broadly flat (-0.7%) in the half year to June with continued growth in Issues (+6.3%), Media (+5.4%), the Middle East (+46.6%) and Europe (+5.7%).
The company laid the cause of the result at the feet of an uncertain macro environment causing near-term client caution, deferred project spend, particularly in Australia, which has greater exposure to consumer-facing clients and annualised prior year client losses.
Advertising overall fell 9.5%, and -2.5% when excluding Australia. M+C reported growth in the US, the UAE and Europe.
The company highlighted what it called "significant" actions in Australia to reshape the business and support future profit.
This included new leadership, the closure of an "unprofitable full-service media business" Bohemia as well as restructuring.
A restructuring program, mainly across advertising and consulting in Australia, has removed duplication and improved margins and will contribute to an incremental annualised saving of at least £7 million
Dani Bassil, most recently chief executive at Clemenger BBDO, became CEO, M+C Saatchi Group AUNZ, last month. Justin Graham departed as group CEO APAC.
Since then, Bassil has hired Anita Zanesco to be chief marketing officer, a newly created role for the ANZ region.
"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,” said CEO Zaid Al-Qassab in London.
“This particularly impacted our Australian business, which subsequently had an adverse effect on the group's first half results.
“Excluding Australia, the group would have been broadly flat which is testament to the strong underlying business fundamentals.
“We continue to see positive momentum in our growth engines, with Issues, Media, Europe and the Middle East, all continuing to grow in the first half.
"We acted quickly to accelerate transformation cost savings in order to maintain our investment in higher margin growth areas.
"Looking ahead, while we expect continued macro uncertainty in the second half, we will focus on what is in our control, aiming to deliver on the improving pipeline momentum. In the medium term, we continue to improve our operating model, and the strength and diversity of our portfolio, meaning we are well-positioned to deliver on our growth ambitions and to create value for shareholders."
Cost savings will deliver at least £12 million in the financial year, the company said.
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