British advertising group M&C Saatchi said on Thursday that it expects its like-for-like sales to decline this year, pointing to a weaker second quarter as clients postponed spending due to an uncertain economic environment, especially in Australia.
The company reported that first-half net revenue, excluding pass-through costs, fell 5.1% to £103.8 million. The earnings were weighed down by the “uncertain macro environment” and challenges in its Australian operations, which underwent a restructuring and saw the closure of its media division. Without Australia, net revenue was down just 0.7%.
Like-for-like operating profit dropped 36% to £10.3 million, while the operating profit margin decreased by 4.8 percentage points to 9.9%. M&C Saatchi attributed the decline to the “annualisation of prior year investments” and additional strategic spending in the first quarter, with weaker revenue in the second quarter further amplifying the impact.
The British advertising group is one of several industry companies warning of short-term caution among clients facing economic uncertainty. Earlier this week, Martin Sorrell’s S4 Capitl lowered its profit forecast, while WPP in August flagged reduced client spending after posting a 48% decline in its first-half profit.
“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,” M&C Saatchi CEO Zaid Al-Qassab said in a statement.
M&C Saatchi, whose clients include Amazon, Meta, Adidas, and Burberry, expects like-for-like sales to fall by a mid-single-digit percentage for the full year ending December 31. However, it anticipates that annual profit will remain roughly in line with last year, supported by cost-saving measures.
Non-advertising divisions, which include Issues (public sector work), Passions and PR (such as Sport & Entertainment), and Consulting, and Media, recorded a 2.8% decline. This was largely driven by drops in Consulting (-16.8%) and Passions and PR (-8.8%), though Issues grew 6.3% and Media rose 5.4%.
Advertising, which makes up 32% of like-for-like net revenue, decreased 9.5% year-on-year to £33.9 million. The decline was heavily influenced by weakness in the Australian market, while the U.S., UAE, and Europe posted growth.
The UK remains M&C Saatchi’s largest market, despite an overall revenue decline of 3% caused by a “soft performance” in Advertising and Consulting. Revenue across Europe increased 5.7% (16.7% in 2024), and the Middle East saw strong growth of 46.6% (47.6% in 2024). Asia-Pacific, dominated by Australia, posted a 22.7% decline, while revenue in the Americas fell 3%.
“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.” added Al-Qassab.
