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M&C Saatchi posts revenue growth; Singapore and Malaysia shine, Japan underperforms

M&C Saatchi logoMalaysia and Singapore were regional highlights on advertising agency M&C Saatchi’s first half of the year balance sheet, released overnight, although poor returns in Japan saw the company reduce its holdings in M&C in Japan to 10%.

While revenue in its home market of the UK fell by 1%, earnings for Asia and Australasia climbed 5%, the same rate of growth as the previous reporting period in March.

M&C’s China operation, Aeiou, was also marked out as a strong performer, while Malaysia’s win of the KLIA business, and Singapore’s win of Shell retail were other highlights.

The headline operating margin for the region was 11.9%, down slightly from 12.0% in 2015, with the headline operating profit ahead 4% on the same period last year.

Source: The company

Source: The company

The US was a highlight region, with like-for-like earnings up 27% and an increase in operating profit of 95% to £3.4m.

Overall revenue for the first six months rose to £100.2m, up from £87.5m on the first half of 2015, while profit before tax was up 19% to £11.4m and earnings up 22% to £7.7m.

M&C Saatchi CEO, David Kershaw, said the despite the slight slip in the UK, the group was moving ahead.

“Momentum across the Group remains strong, producing positive revenue and earnings growth over the first six months of 2016,” Kershaw said.

“We are well-positioned and see significant opportunities from our breadth of offer in the fastest-growing segments. The second half has started well, with trading in line with expectations. We continue with the proven strategy.”

The company noted that in the UK headline operating profit was down by 10% on the previous year but was impacted by restructuring costs.

“M&C Saatchi PR and our Sport & Entertainment division as well as our research operation The Source all performed strongly,” the announcement said.

“However, this growth was offset by the impact of 2015 client losses within the advertising agency. We experienced a favourable run of account wins across our group of businesses in the first half, including Ageas, Alibaba, the Department of Work and Pensions, E.ON, the Home Office, Open University, Rail Delivery Group and further work for Royal Mail.”

In Europe headline operating profit rose 51% while like-for-like revenues in the Middle East and Africa lifted 19%.

M&C said the second half of the year had already started well and there had been impact from Brexit.

“We have not seen any impact as a result of the Brexit decision other than a positive foreign currency impact,” it said.

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