M&C Saatchi hit by drop in client spend

M&C Saatchi, the global advertising network, has seen a drop in pre-tax profit to £5.4m in the six months to the end of June, with Europe and the US particularly hit by clients tightening their spend in marketing.

Change 4 Life

The group saw pre-tax profit reach £5.4m, which was a fall from the £8m it reported in the same 2008 period. Total revenue was £49.8m, compared to £51.8m a year earlier.

In the UK, revenue declined 6% to £23.8m, compared to £25.2m last year. The headline operating profit similarly fell to £5.0m, compared to £5.8m a year earlier.

The group says trading in the UK has remained tough in comparison to previous years, with clients reducing communications budgets since the last quarter of 2008 in the face of the tough economic climate.

It adds that this year it is now seeing significant pressure being applied to fees to reflect the reduction in activity.

However, it raised new revenue during the period from the Department of Health’s “Change 4 Life” anti obesity campaign, which it won last year, as well as assignments from Boots for its Advantage Card, The Carphone Warehouse, Castrol and for the State of Georgia.

In continental Europe, the group says there have been few new business opportunities. The weakness of sterling was the cause of the reported revenue increase of 9.7% to £4.5m, compared to £4.1m last year.

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