Advertising and communications budgets at large companies seem to be recovering if a solid set of half-year results at iconic advertising agency M&C Saatchi (SAA) are anything to go by. Billings grew by 6 per cent to £255m and underlying pre-tax profits, which strips out the effect of non-cash financial charges related to some minority put options, rose by the same amount to £9.3m. That level of growth is double that of the rest of the advertising market.
M&C Saatchi experienced revenue growth of 8 per cent in its UK business, which is the company's largest market in terms of billings. This was driven by a raft of successful pitches, including the digital accounts for the likes of Land Rover, RBS and Boots. The performance in Europe depended more on the state of the individual economies. For example, there was some drag from Sweden that knocked 5 per cent from divisional operating profits, but like-for-like revenues were still 21 per cent higher buoyed by new business won in Germany and, surprisingly, Italy.
Chief executive David Kershaw, who also helped found the company, said M&C's performance tended to be determined by "micro conditions" in individual markets which often meant it could outperform the rest of the industry.
Broker Numis Securities forecasts full-year adjusted pre-tax profits of £18.5m and EPS of 15.8p, compared with £17.2m and 14.7p in 2012.
M&C SAATCHI (SAA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 290p | MARKET VALUE: | £197m | |
| TOUCH: | 285-294p | 12-MONTH HIGH: | 300p | LOW: 155p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 271 | |
| NET ASSET VALUE: | 77p* | NET CASH: | £20m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 82.8 | 6.00 | 3.73 | 1.10 |
| 2013 | 87.1 | 4.20 | 0.91 | 1.21 |
| % change | +5 | -30 | -76 | +10 |
Ex-div: 30 Oct Payment: 15 Nov *Includes intangible assets of £61.2m, or 90p a share | ||||
