Source: Sharecast
Net revenues fell 2.7% in the six months to 30 June to £87.8m, or by 1.4% on a like-for-like (LFL) basis to £86.2m. Operating profits tumbled 81.7% at £1.3m, while pre-tax losses came in at £161m. A year earlier, M&S Saatchi posted pre-tax profits of £4.3m.
The AIM-listed company said the tough trading environment seen at the end of 2025 - caused by an uncertain macroeconomic backdrop - had continued into the first quarter. "Client caution, particularly in consumer-facing sectors, resulted in slower decision-making, lower-project based spend and increased retainer turnover," it noted.
A spike in one-off costs further weighed on earnings, as the company looked to restructure.
However, executive chair Heather Rabbatts said conditions had improved in the second quarter, leading to "modest" topline growth.
She continued: "The group remains focused on improving operational effectiveness, simplifying the business and improving sustainable profitability. Notwithstanding market conditions, we are confident in delivering LFL net revenue and operating profit growth for the full year, in line with market expectations."
As at 1130 BST, the shares were down 6% at 138p.
Berenberg lowered its revenue and operating profit forecasts by 14% and 18% following the results, primarily due to the Australian business being reported as a discounted operation.
However, the broker continued: "Excluding Australia, performance looks to be improving, which is encouraging given the extended conflict in the Middle East. The implied second-half ask is large, but is explained by the lost profit last year relating to the issues business and government shutdown."
Berenberg retained its ‘buy’ recommendation, but lowered its price target to 175p.
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