M&C Saatchi (SAA) has invested in a “rich crop” of new markets, says chief executive David Kershaw, and plans to “keep sowing the seeds and reaping the benefits.” The first-half harvest was certainly bountiful: strip out minority put options, which vastly inflate profits in the table below, and the group grew pre-tax profits by 17 per cent to £8.5m.
Its core UK business grew sales by 17 per cent as it won accounts with the likes of Land Rover and John Lewis while expanding popular services such as mobile and customer relationship management (CRM). CRM appeals to clients because it’s easier to keep existing customers happy than to acquire new ones. It has also become a powerful tool in an age of extensive customer data and new marketing channels such as email, mobile apps and social media.
Like-for-like sales leapt 57 per cent in the Americas, while operating profits in M&C Saatchi’s Middle East and Africa business climbed two-thirds as it won business with Pepsico and Deloitte Consulting. The group also continued to break into new territories through joint ventures with local agencies, as it did with aeiou in China. It bought 20 per cent of Delhi-based agency February, and plans to replicate the strategy in Sao Paulo.
Broker Numis expects full-year pre-tax profits of £17m, giving EPS of 15.4p, up from £14.6m and 11.6p last year.
| M&C SAATCHI (SAA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 280p | MARKET VALUE: | £ 186m | |
| TOUCH: | 277-278p | 12-MONTH HIGH: | 350p | LOW: 235p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 151 | |
| NET ASSET VALUE: | 64p* | NET CASH: | £9.6m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 80.1 | 1.8 | 0.9 | 1.21 |
| 2014 | 82.6 | 13.4 | 15.8 | 1.40 |
| % change | +3 | +661 | +1632 | +16 |
Ex-div:30 Oct Payment:14 Nov *Includes intangible assets of £35.1m, or 53p a share | ||||
