Strong new business wins have propelled sales and profits at media agency, M&C Saatchi. And while chief executive David Kershaw cautions that progress in 2012 won't be "as dramatic", he's still expecting double-digit earnings growth. That leaves the shares, trading on under 10 times forecast earnings, looking too cheap.
New client win momentum was particularly evident in the UK with, for example, the Loewe and Etihad global accounts having been signed in the period. UK revenue rose 25 per cent year-on-year to £67m, with operating profit up 18 per cent to £8.9m. It rose even more - 32 per cent to £1.98m - in Europe, where newly opened offices such as Italy have helped secure new clients like Telecom Italia.
Performance in the Asia and Australasia unit was less positive, with high levels of customer churn in Australia and a competitive environment in China, forcing divisional operating profit down 30 per cent to £2.28m. That said, a string of new client wins in Australia, combined with a focus on global mandates over local ones in China, should deliver profit growth of 5-10 per cent within the region this year.
Numis Securities expects 2012 pre-tax profit of £16.7m, giving EPS of 15.4p (2011: £15.6m/14p).
M&C SAATCHI (SAA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 152p | MARKET VALUE: | £ 95.5m | |
| TOUCH: | 150-154p | 12-MONTH HIGH: | 161p | LOW:107p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 85p* | NET CASH: | £14.8m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 413 | 7.96 | 5.80 | 3.62 |
| 2008 | 104 | 10.5 | 10.0 | 3.62 |
| 2009 | 103 | 10.3 | 10.2 | 3.62 |
| 2010 | 125 | 7.81 | 4.15 | 3.90 |
| 2011 | 153 | 16.0 | 15.4 | 4.50 |
| % change | +22 | +105 | +271 | +15 |
Ex-div:06 Jun Payment:06 Jul *Includes intangible assets of £60.2m or 96p per share | ||||
