M&C Saatchi Plc reports 8% decline in operating profit
LONDON, UK: M&C Saatchi Plc has reported a challenging fiscal year 2023. The company saw a slight decrease in revenue, down by 2% from the previous year, standing at £453.9 million compared to £462.5 million in FY22. This dip was mirrored in the net revenue, which also fell by 7% to £252.8 million.
The company’s EBITDA followed suit with an 8% decrease, amounting to £41.5 million. Operating profit was not immune to the downward trend, dropping by 8% to £32.4 million, and a more pronounced decline was observed in the statutory operating profit, which plummeted by 31% to £7.3 million.
Profit before taxation took a significant hit, reducing by 10% to £28.7 million, and a stark contrast was seen in the statutory profit before taxation, which suffered an 87% decrease to a mere £0.7 million.
Despite these setbacks, M&C Saatchi Plc managed to report a slight increase in earnings per share (EPS), up by 3% to 15.2p. However, the statutory EPS saw a downturn, with a loss of (2.9)p per share.
The operating profit margin experienced a marginal decrease from 13.1% to 12.8%. On a positive note, the company increased its dividends per share by 6%, from 1.5p to 1.6p, signaling confidence in its ability to maintain shareholder value amidst financial headwinds.
The like-for-like (LFL) figures, which adjust for acquisitions and disposals, indicate a 2% decrease in net revenue, suggesting that the company’s core business operations are also feeling the pressure.
Overall, M&C Saatchi Plc’s financial performance in FY23 reflects the broader challenges faced by the industry, but the company remains committed to navigating through these turbulent times.
Zillah Byng-Thorne, Executive Chair, said: “2023 was a year of strategic progress. We have begun to transform into a leaner and more agile business laying the groundwork for sustained growth and improved profitability ahead.
There is much more to do on simplifying how we interact with our clients and evolving our go-to-market strategy. With strengthened cash generation, we expect to re-invest in value accretive opportunities to enhance shareholder returns.
“I am delighted that Zaid Al-Qassab joins as CEO in May to lead M&C Saatchi on its next phase of growth, building on a simplified operating model and supported by our exceptional leaders.
“We are encouraged by our performance in the start to the year, and while macro-economic uncertainty across our markets remains, our continuing transformation, which is already delivering, underpins our confidence that we will meet expectations.”
“Over the last 12 months, there have been many changes at M&C Saatchi against a background of significant market volatility. The Board has materially changed, including the appointment of a new Chair and Chief Executive Officer designate while our markets have been challenging, particularly in the technology sector. As such, we have taken the decision to no longer provide long-term targets and will, instead, provide nearer-term guidance.
2024 has started with renewed energy and focus and encouraging first quarter momentum. While our end markets continue to be affected by macro-economic uncertainty, we expect Headline profit before tax for 2024 to be in line with expectations. We are confident that the structural changes we are making to our cost base alongside our new operating model are increasing our operational leverage potential which will help support future margin expansion.
We have evolved the senior leadership team increasing capabilities and alignment. Zaid Al-Qassab’s arrival as our new Chief Executive Officer is at the core of this process and sets the scene for our delivery over the coming years.
We are well progressed on building a simplified operating model which places our regional focus and global specialist expertise at the heart of everything we do. This will ensure we can continue to be unashamedly bold, creative, entrepreneurial and fearless in the work we do with our clients.
Our focus is on growing returns for our shareholders by investing in capabilities and driving the Group forward with renewed purpose. We have a marked advantage in being able to operate at scale with the agility of a start-up, allowing us to move at pace.”
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