M&C Saatchi forecasts 'mid-single digit' revenue drop for 2025

M&C Saatchi has forecast revenues in 2025 will drop by "around mid-single digits", according to interim H1 results.

The company said H1 net revenue, which strips out pass-through costs, declined by 5.1% to US$140.7 million (£103.8 million).

Income was impacted by the “uncertain macro environment” and its Australian business, which went through a restructure and a closure of its media business. Excluding Australia, net revenue fell by 0.7%.  

Meanwhile, like-for-like operating profit fell by 36% to US$13.9 million (£10.3 million), and operating profit margin declined by 4.8 percentage points to 9.9%. According to the company, the profit drop was driven “by the annualisation of prior year investments and strategic investments in Q1”, while revenue shortfall in Q2 “magnified the impact”.  

Non-advertising specialisms, which include Issues (public sector work), Passions and PR (including Sport & Entertainment), Consulting and Media, declined by 2.8%. This was driven by a fall in Consulting (-16.8%) and Passions and PR (-8.8%). However, Issues grew by 6.3% while Media grew by 5.4%. 

Advertising, which accounts for 32% of like-for-like net revenue, was down by 9.5% year on year to US$45.9 million (£33.9 million). This was also impacted by the decline in the Australian market, while US, UAE and Europe showed growth.  

The UK remains M&C Saatchis’ biggest region, despite a 3% overall revenue decline driven by a “soft performance” in Advertising and Consulting. Revenue was up across Europe by 5.7% (16.7% in 2024) and the Middle East, which was up 46.6% (47.6% in 2024). 

The Asia-Pacific region, which is predominantly led by Australia, declined by 22.7%, while the Americas fell by 3%.   

Zaid Al-Qassab, chief executive officer of M&C Saatchi, who joined in 2024, said: “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. 

“This particularly impacted our Australian business, which subsequently had an adverse effect on the group’s first half results. Excluding Australia, the group would have been broadly flat, which is a testament to the strong underlying business fundamentals. We continue to see positive momentum in our growth engines, with Issues, Media, Europe and the Middle East, all continuing to grow in the first half. We acted quickly to accelerate transformation cost savings in order to maintain our investment in higher-margin growth areas.  

“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.”

The results follow a restructure in 2024, including the sell-off of non-core and loss-making businesses.