- Pre-tax profits fall 10% despite revenues hitting targets
- Confident of meeting full year 2024 expectations
- Flags new business wins with WHO, Adidas, Nike, McDonald’s
Shares in M&C Saatchi (SAA:AIM) were down 2% to 170p in morning trading as the international marketing and advertising agency announced a 10% fall in pre-tax profits to £28.7 million for the year ending 31 December 2023.
Net revenue was £252.8 million, a fall of 7% marginally ahead of market consensus of £252 million, according to data firm Bloomberg.
However, the company was upbeat about the full year results despite a ‘challenging trading environment’ and reported new business wins from the World Health Organisaton, Porsche, Adidas, Nike, Revlon, and McDonald’s.
The advertising agency also saw ‘encouraging first quarter like-for-like momentum.’
NEW CEO AND DIVESTING SHARES
Separately, Zillah Byng-Thorne M&C Saatchi’s executive chair announced the appointment of Zaid Al-Qassab as CEO. Al-Qassab joins from Channel 4.
The company also announced it would be divesting shares in M&C Saatchi South Africa to the subsidiaries’ directors for £5.6 million.
‘These divestures follow a bid by management to streamline the company’s operations and improve internal efficiency’, said M&C Saatchi.
EXPERT VIEW
Shore Capital analysts Roddy Davidson and Chris Bottomley seemed positive about the direction of the advertising firm: ‘From a share price perspective, M&C Saatchi has increased by circa 9% and circa 32% over a three and six-month time-frame, respectively.
However, on a 12-month view, the stock remains around 7% down. Based on Bloomberg estimates, M&C Saatchi shares are currently trading on full year 2024 forecast PE (price to earnings) of 9.4-times.
‘Given the initial success of the ongoing efficiency programme implemented by management, strong growth in its specialism service lines and a greatly reduced put option liability, we see this valuation modest against the possible earnings growth potential over the medium term.’
