Wednesday 27 March 2019 9:02 am

Advertising giant M&C Saatchi hikes profits as new business grows margins

Advertising giant M&C Saatchi boosted profits last year as it signalled a confident outlook for 2019.

The figures

Profit before tax grew 16 per cent year on year to £32.3m as net revenue rose two per cent to £255.3m compared to 2017.

Saatchi’s profit margin also ticked up one per cent to 12.3 per cent while earnings per share hit 25.01p.

The media firm hiked its full-year dividend up 15 per cent to 10.96p, compared to 2017’s 9.53p. Its final dividend rose 15 per cent to 8.51p.

Its share price dropped 0.7 per cent to 389p.

Why it’s interesting

M&C credited organic growth – rather than M&A activity favoured by rival Sir Martin Sorrell’s WPP and now S4 Capital – for its rising revenues.

It did take a 51 per cent stake in social influencer agencies Red Hare and Grey Whippet, as it sold its remaining 25 per cent stake in Walker Media for £25m, also appointing a creative director for the first time.

Saatchi also launched Send Me a Sample in September, a platform that lets people order free samples to their homes via Alexa and Google Assistant.

Like-for-like revenues rose in the UK and Europe by two per cent year on year, while the Middle East and Africa grew like-for-likes 11 per cent.

Saatchi also boosted its UK profit operating margin 1.6 per cent to 17.6 per cent as it woon new business from the likes of Ebay, Experian and Twinings.

Fiona Orford-Williams, analyst at Edison Investment Research, said: “The point of note in the M&C Saatchi results is not so much the net revenue growth, which is respectable, but the step up in the operating margin from 11.3 per cent to 12.3 per cent as the newer business streams, such as Sport & Entertainment and Performance, increase in the mix.

“There‘s also a good step up in the proposed dividend, with the balance sheet strengthened further since the year end with the sale of Walker Media.”

What M&C Saatchi said

Chief executive David Kershaw said: “2018 was another record year for M&C Saatchi in terms of net revenue and earnings. Our unique business model of starting and growing companies with the best entrepreneurial talent continues to flourish.

“This year has begun well, and we are confident that we will continue to make good progress in 2019 and beyond.”