M&C Saatchi's operating profit fell in the first half of the year, according to results posted in the UK.
Globally the advertising agency expects full year profit to be down on expectations by 5% to 10%. The company also reported an accounting review by PwC which is expected to lead to a restatement of 2018 results.
M&C Saatchi shares fell in the UK by almost 13% to close at 150 pence, a seven-year low.
The company posted a 87.7% rise in statutory pretax profit to £9.4 million because of the sale of a 24.9% share in Walker Media for £25 million. Without that, the company would have posted a loss.
Billings were down 3% to £280.7 million. Revenue was up 0.7% to £214.2 million.
CEO David Kershaw says the results have been impacted by the number of new businesses, including start-ups, as well as the weighting of revenues shifting towards the second half of the year.
"Whilst this has had a short term impact on our results, we remain confident in and committed to our strategy of winning new business and investing in new, fast-growing businesses," he says.
"Looking to the second half, our pipeline of new business is strong across the network, and our newest businesses are performing well and expected to start making a meaningful contribution to the group."
In Australia, the advertising agency says the local business is "heavily skewed" to retail clients with a focus on advertising and promotions during the final quarter of the year.
M&C Saatchi says "non-recurring income" in Australia for the same six months in 2018 resulted in "lower comparative profits" in the 2019 first half.
However, spend is expected to increase in the last six months due to M&C Saatchi Australia's strong retail client base, inlcuding Woolworths, Optus, Lexus, Cricket Australia and Tab.
Clients won in 2019 by the Australian group include AHC (a division of Unilever), SUMO Power, FlexiGroup, Uniting (NSW ACT), Sony Music, AVEO Group, Respiri, Racing Victoria, Plush, Yourtown, Ethos Urban, UNSW, Bill Care and SMEG.
Asia and Australia as a group reported a 1% increase in like for like net revenues to £32.8 million ($A60.27 million) from £32.6 million ($A59.9 million in 2018.
Headline operating profit in that region was down 48% to £2.3 million ($A4.23 million) from £4.6 million ($A8.45 million). Costs increased 6%.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.