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M&C Saatchi expects 2024 profit to meet forecasts
Global Banking and Finance Review
Company
(Reuters) – M&C Saatchi said on Wednesday it expected to meet profit expectations this year, betting on its cost-savings initiatives and divestment of loss-making
(Reuters) – M&C Saatchi said on Wednesday it expected to meet profit expectations this year, betting on its cost-savings initiatives and divestment of loss-making businesses, after the British advertising group posted a 10% fall in 2023 earnings.
The advertising industry has been grappling with significant cutbacks by tech clients on marketing, while new business wins have been at a slower pace amid cautious customer spending in an uncertain economic environment.
Saatchi, which named Channel 4’s Zaid Al-Qassab as its new CEO earlier this year, has divested some of its businesses to help improve margins and drive profits, with the most recent being its shareholding in its three French associate investments and M&C Saatchi South Africa Group.
“We have begun to transform into a leaner and more agile business, laying the groundwork for sustained growth and improved profitability ahead,” Executive Chair Zillah Byng-Thorne said.
“Limited surprises today. M&C is making strong progress with the cost-savings programme, with more to come this year,” analysts at Peel Hunt said in a note.
Last month, peer Martin Sorrell’s S4 Capital forecast another tough year after core earnings fell 25% in 2023, reflecting a reluctance from its tech-heavy clients to spend and few new business wins.
While fellow advertising group WPP in February said clients in the United States were starting to feel more positive, it would see little or no upside in the first half of the year due to the loss of some creative accounts.
Headline profit before tax was down 10% for the year ended Dec. 31 to 28.7 million pounds ($36.38 million), and down just 1% on a like-for-like basis after improved performance in the second half of the year.
Revenue from advertising, Saatchi’s largest segment, was down 8% on a like-for-like basis.
($1 = 0.7888 pounds)
(Reporting by Radhika Anilkumar in Bengaluru; Editing by Subhranshu Sahu)
Profit before tax is a company's earnings before tax expenses are deducted. It provides insight into the company's profitability from its operations.
A cost-saving initiative refers to strategies implemented by a company to reduce expenses and improve efficiency, ultimately enhancing profitability.
A CEO, or Chief Executive Officer, is the highest-ranking executive in a company, responsible for making major corporate decisions and managing overall operations.
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