M&C Saatchi has reported that global revenue for H1 2023 was £120.4million ($232 million AUD), down 7.0% compared to last year.
Overall Headline operating profit was £10.0million (19.27 million AUD), a decline of £8.1million versus last year.
On a statutory basis, the Company delivered a loss before tax of £5.1million ($9.8 million AUD) as compared to a 2022: £0.3million profit, due to the decline in net revenue of £9.0million that has been partially mitigated by statutory cost savings of £3.6million.
M&C Saatchi's specialisms sectors delivered £70.3million ($135.4 million AUD), up +0.9% vs last year, fuelled by double digit revenue growth in the Issues (+20.6%) and Passions (+11.0%) specialisms.
Issues is defined by the company as ‘driving critical global and social change, protecting the planet, transforming lives for the better’, while Passions is defined as ‘connecting brands direct to consumers through passions and personalities’.
The company said that along with the wider market, it experienced challenging trading conditions in H1, particularly in businesses with more exposure to a technology client base or where there is more discretion around client spend resulting in lead times for new projects widening.
“This had an impact on revenues in our Media specialism (-30.1%) and the Advertising division (-16.1%), although we saw a strong performance in our US advertising business (+4.1%),” it said.
Advertising contributed £50.1million (42%) of the Group's net revenue (H1 2022: £59.5million, 46%) and £0.5 million (5%) of the Group's Headline operating profit (H1 2022: £4.1million, 21%).
M&C Saatchi reported revenue pacing marginally ahead of this time last year, with 85% of full year expected revenue booked, with improving momentum in H2 and a small single digit net revenue decline expected.
On outlook: "Operating leverage in Advertising, combined with our global efficiency programme, means that we are expecting improvement in Headline operating margin in H2. Full year margin is expected to be in line with last year," said M&C Saatchi.
In light of the continued challenging macro environment, the company said it's taking a "cautious view" overall on H2, but is expecting the Group to benefit from the global efficiency programme and review of loss-making entities in 2024.
"In H2, we expect continued strong momentum in the Issues and Passions specialisms, and some recovery in the Media specialism and Advertising division, supported by the typical seasonality of client campaigns," said M&C Saatchi.
Moray MacLennan, CEO of M&C Saatchi, said the diversification of the company's offering, combined with swift action on its cost base, have ensured good momentum into the second half, despite a slower start to 2023.
"Strong double-digit growth in Issues and Passions, in particular, reflects our continued investment in our specialisms," he said.
Zillah Byng-Thorne, executive chair, said the second half of the year is about growth, execution, and efficiency.
"Whilst some economic headwinds are likely to continue, we are focused on what we can control: continued connectivity of our business, elevating our highest-margin businesses in resilient segments, underpinned by tight cost management," said Byng-Thorne.
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