(Reuters) - M&C Saatchi (LON:SAA) 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.
WHY IT'S IMPORTANT
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.
KEY QUOTE
"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 (LON:PEEL) said in a note.
CONTEXT
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 (LON: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.
BY THE NUMBERS
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)