By Samuel Indyk
Investing.com – M&C Saatchi (LON:SAA) shares were trading higher early on Wednesday as the firm said trading in the first five months of the year has been ahead of expectations, alongside its full year results.
For the year ended 31st December 2020, the company saw a 12% decrease in revenue to £225.4mln as the Covid pandemic impacted spending on advertising.
However, the company managed to report a £8.3mln profit, which was ahead of expectations, reflecting strong client retention and new business performance.
“The resilience of the Company and our people was reflected in the outstanding client retention across 2020,” said M&C Saatchi Chief Executive Officer Moray MacLennan. “Our agility allowed us to quickly adapt to the new market conditions (including an even greater focus on digital) and enabled the swift implementation of our new strategy.”
The strategy was one of simplification. M&C Saatchi sold, closed or merged 20 operating entities during the year and the process has continued in 2021 with the number of operating entities reduced by 34%.
The company decided not to pay a dividend to shareholders in 2020 because of the need to retain cash during the pandemic. The board has decided the priority should be to return to the business to pre-pandemic levels of profitability and earnings, and assuming a return to normal trading conditions, they then expect to reinstate dividends.
Looking ahead, the company said trading has been ahead of expectations for the first five months of 2021 with half year headline profit expected to exceed £10mln.
“We anticipate being ahead of consensus for the full year,” MacLennan added. “Profit in all five of the new divisions has grown in 2021 through meeting new client demands in the new digital landscape.”
At 09:16BST, shares in M&C Saatchi were trading higher by over 10% at 163.32 pence per share.