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M+C Saatchi has downgraded its profit outlook again, this time blaming the “unprecedented” US government shutdown, the longest in history.
The global advertising group said this had affected its Issues specialism which is a significant contributor to the company's December quarter revenue and profit.
The company said there is no impact to the relationship or any ongoing contract agreements or longer-term growth of the business.
However, the lost revenue isn’t expected to be recovered this financial year.
M+C now expects a like-for-like net revenue to drop by about 7%, or about 1.5% excluding Australia which has been identified as a poor performer.
Previously the company expected full year revenue to slide by about mid-single digits and profit to be flat on last year.
Now M+C sees full year operating profit in the range of £26 million to £28 million, indicating an operating profit margin of around 12.5% - 13%, which is below the expectation set out in the company's interim results announcement.
In Australia, the company said it had made "significant structural changes," including a new management team, a group-wide restructure and reset of the overhead cost base.
Local management is exploring options to secure growth and shareholder value, according to the trading update.
In August, Dani Bassil, most recently chief executive at Clemenger BBDO, became CEO, M+C Saatchi Group AUNZ. Justin Graham departed as group CEO APAC.
"I would like to thank all colleagues at M&C Saatchi for their continued commitment to delivering fantastic work for clients in a very tough market context,” said CEO Zaid Al-Qassab.
“A challenging macro environment has been further compounded by the unprecedented US government shutdown, which adversely impacted our high-margin Issues specialism in the fourth quarter.
“We remain confident that our long-term value drivers will deliver growth and margin accretion.
"We also see significant value upside from our diverse portfolio, deep partnerships with clients, and creativity, and we are resolutely focused on maximising value for clients, colleagues and shareholders, including via our commitment to a share buyback programme."
In the half year to June, like-for-like net revenue was down 5.1% to GBP 103.8 million. Operating profit fell 36% to GBP 10.3 million.
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