M&C Saatchi profits up on sale of loss-making businesses

M&C Saatchi posted a higher profit in the first half of 2024 after closing loss-making divisions amid tough times for the advertising industry.

The London-listed advertising agency reported comparable operating profit growth of 40 percent to £17.1 million in the six months to June.

Under the law, the London-based company went from a loss of £3.6 million to a profit of £14.1 million, mainly by cutting staff costs by more than £12 million.

This was the result of significant cost savings in the back office and the closure or sale of loss-making and non-core activities, including the Swiss, Swedish and Hong Kong operations.

But the advertising division delivered growth in profitability after the company faced difficult conditions last year when new orders fell.

The segment saw its operating profit almost triple to £5.1m on the back of sales growth in the US, Europe and the Middle East.

By comparison, M&C Saatchi’s non-advertising specialisms delivered strong revenue growth of 4 per cent to £211.5m, driven by strong demand from security and government organisations.

The company received repeat business from about three-quarters of its clients in 2023, winning major customers including fast food giant McDonald’s, Ikea, Ford, Danone and Sony Pictures.

Zaid Al-Qassab, CEO of M&C Saatchi, said: ‘We continue to make great progress in building a strong platform to deliver sustainable organic growth through our self-help initiatives and wider transformation.

“Our increasingly diversified revenues provide greater resilience to macroeconomic volatility and our higher margin businesses remain our largest growth contributors.”

Al-Qassab took over as CEO in May, after five years as Chief Marketing Officer at Channel 4 and also worked at BT Group and Procter & Gamble.

He succeeded Moray MacLennan, who joined as UK CEO when the company was founded in 1995.

MacLennan became global CEO of M&C Saatchi in 2020, just as the company was facing the fallout from an accounting scandal that saw the company overstate profits by £14m over several years.

His tenure as global CEO coincided with a period when the advertising industry globally was experiencing a massive recession as the Covid-19 pandemic caused companies to drastically cut their marketing budgets.

M&C Saatchi later became the target of failed takeover attempts by marketing consultancy Next 15 Communications and Vin Murria’s investment vehicle Advanced AdvT.

M&C Saatchi is known for its longstanding association with the Conservative Party and its clientele includes some of the largest companies, including Diageo, Amazon, Google and Foot Locker.

M&C Saatchi shares rose 2.9 percent to 197p on Wednesday morning, taking its gain over the past year to around 44 percent.