M&C Saatchi suffers losses as tech companies cut ad budgets
- The ad agency posted a pre-tax loss of £5.1 million for the six months to June.
- Saatchi’s half-year results will be last with Moray MacLennan as chief executive
- Diageo, Coca-Cola and Adidas are among the company’s notable corporate clients
M&C Saatchi suffered a first half loss following a significant drop in spending by the advertising group’s technology clients in the UK and US.
The advertising agency posted a pre-tax statutory loss of £5.1m for the six months to June, compared with a profit of £305,000 in the same period last year.
Net income fell 7 per cent to £120.4 million as a weaker economic environment hit companies with greater exposure to the technology sector or whose customers had more discretion over spending.
Results: M&C Saatchi posted a pre-tax statutory loss of £5.1m for the six months to June, compared with a profit of £305,000 in the same period last year.
This particularly affected Saatchi’s media specialty, which saw its turnover fall by almost a third despite securing new contracts with companies such as Sega, Amazon and the ticket exchange marketplace TickPick.
At the same time, net sales fell 16 per cent to £50.1 million in the company’s advertising division due to moderating new business volumes and weaker results in countries such as China and Germany.
Due to the weakened market context, the group adopts a more cautious outlook for the second half of the year.
While it has seen “improving momentum” since early July, it expects a modest single-digit decline in net income over the final six months of 2030.
Zillah Byng-Thorne, chief executive of M&C Saatchi, said: ‘The second half of the year is about growth, execution and efficiency.
“While some economic headwinds are likely to continue, we are focused on what we can control: the continued connectivity of our business, elevating our higher-margin businesses in resilient segments, supported by strict cost management.”
Saatchi’s interim results will be the last under the leadership of chief executive Moray MacLennan, who will leave his role at the end of this month.
MacLennan co-founded the company in 1995 after brothers Maurice and Charles Saatchi were fired in a coup from another company they had co-founded, Saatchi & Saatchi.
His rise to the top job came on the heels of an accounting scandal, in which the London-based company admitted to overstating its profits by around £14m.
The problems worsened during his first year in charge when the Covid-19 pandemic caused a global crisis in the advertising industry.
But trading rebounded strongly after lockdown restrictions were eased and the group was able to fight off takeover bids from Next Fifteen Communications and Vin Murria’s Advanced AdvT investment vehicle.
Known for his long association with the Conservative Party, Saatchi’s clients include some of the biggest corporate names, including Diageo, Coca-Cola, Adidas and Google.
M&C Saatchi shares They were down 1.5 per cent, or 2p, at 128p on Thursday afternoon and have fallen around 17 per cent since the start of the year.