M&C Saatchi has suffered a collapse in its share price this morning after investors took fright at a stark profit warning which conceded for the first time that profits for the year could be as much as 27% below the level achieved in 2018.
Traders saw the share price slump by over 42% to just 84 pence as investors digested the grim news, with the adjusted figures spanning both the 2018 and 2019 financial years.
Chief executive David Kershaw commented: “This restatement of our numbers and the reduction in forecasts make for very difficult reading – both for us as a management team and all of our stakeholders.
“The trading performance in the second half of this year is disappointing. However our operating businesses remain strong, creative and competitive and we expect that, when combined with the impact of our restructuring coming through, we will have a stronger trading performance in 2020.”
The first sign that all might not be well at the advertising agency group came in August when the firm absorbed a one-off charge of £6.4m relating to ‘irregular accounting’.
M&C Saatchi is heavily reliant on trading in the final quarter for its full-year profits but these have fallen below expectations, exacerbated by the loss of a key NatWest account which is expected to trigger redundancies as part of a restructure of its UK office.