M&C Saatchi braces itself for annual profits slump after first half woes
M&C Saatchi has warned that it expects its full-year profits to come in 5-10% below estimates following losses and high-profile accounting errors that have rocked the advertising business.
M&C Saatchi braced for a profits slump of between 5 and 10%
Its interim results come a month after accounting mistakes necessitating a one-off charge of £6.4m.
It reported a 87.7% rise in pretax profit to £9.4m for the six months ended 30 June thanks to the sale of its 24.9% share in Walker Media. Revenues increased by 0.7%.
However, its headline profits (which strip out the proceeds from asset disposal) showed a 67% fall for the period from £10.3m to £3.4m.
Its shares price hit seven-year low on the news.
The firm blamed the slump on a "larger number of lossmaking entities, particularly startups".
Its chief executive, David Kershaw, said: "Our results in the first half of 2019 have been impacted by the number of new businesses in the group as well as the weighting of revenues shifting towards the second half of the year.
"Whilst this has had a short term impact on our results, we remain confident in and committed to our strategy of winning new business and investing in new, fast-growing businesses. Looking to the second half, our pipeline of new business is strong across the network, and our newest businesses are performing well and expected to start making a meaningful contribution to the group."
The advertising group has been hit by a run of bad publicity in recent months after its UK business acknowledged accounting errors, inadvertently counting outstanding fees as revenues and including assets no longer used on its balance sheet.
This has prompted it to invite auditor PwC to carry out an independent accounting review which is expected to lead to a restatement of its 2018 results in November.
Content created with:
Find out more