(Corrects year in headline to 2025, from 2024) By DhanushVignesh Babu (Reuters) - M&C Saatchi warned on Thursday its like-for-like sales would drop this year as its Australian business was
M&C Saatchi Anticipates Sales Decline in 2025 Amid Economic Challenges
Sales Forecast and Economic Conditions
(Corrects year in headline to 2025, from 2024)
Impact on Australian Business
By DhanushVignesh Babu
Market Reactions and Client Behavior
(Reuters) - M&C Saatchi warned on Thursday its like-for-like sales would drop this year as its Australian business was particularly challenging against a tough economic backdrop and delayed spending by clients, sending its shares down 5%.
Restructuring Efforts and Management Changes
The British advertising group joined other advertising firms which have spoken of near-term caution by clients pressured by economic uncertainty. Martin Sorrell’s S4 Capital on Monday cut its profit outlook, while WPP in August warned of weaker client spending after reporting a 48% drop in 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 its like-for-like sales to decline to mid-single digits for the year ending December 31, with annual profit roughly in line with last year due to cost-saving actions.
Analysts had expected the company's operating profit to increase 6.8% to 37.6 million pounds ($51.12 million) for 2025, according to a company-compiled consensus.
Shares in the company, which have dropped 12.5% in the past 12 months, fell 5% to 159 pence by 0725 GMT.
For the six-month period ended June 30, like-for-like operating profit slumped 36% to 10.3 million pounds year-over-year, pressured by heavy investments in the first quarter and a drop in revenue in Australia.
The group's overall advertising revenue declined by 9.5% in the first half, with gains in the U.S., the UAE and Europe offset by the Australian decline, it said. Excluding Australia, overall advertising revenue would have been down 2.5%.
"We continue to like M&C due to the actions the new management team have taken to improve efficiencies across the group," Berenberg analysts said in a note.
The company has launched a restructuring of its Australian business, installed new leadership and closed an unprofitable full-service media operation in response to the weakness there.
($1 = 0.7355 pounds)
(Reporting by DhanushVignesh Babu and Yadarisa Shabong in Bengaluru; Editing by Harikrishnan Nair, Sherry Jacob-Phillips and Sharon Singleton)
