Analysts welcomed M&C Saatchi PLC's (AIM:SAA) full-year results on Thursday, as both its 2024 performance and guidance for 2025 came in line with market expectations - a reassuring outcome following a year of sweeping internal change.
The advertising and communications group, which has spent the past 12 months transitioning to a more integrated global model, reported like-for-like net revenue growth of 3.7% to £231 million.
Operating profit rose 5.2% to £35.2 million, while margins nudged up to 15.2%. Analysts were especially encouraged by the stability of earnings and the company’s confidence in its medium-term plan.
Specialist non-advertising services, covering areas such as government work, media and sports marketing, now make up two-thirds of the business and delivered 6.7% revenue growth with 25.2% margins.
Advertising, though still core to the group, saw a modest 1.9% decline in revenue, offset by margin improvement and growth in markets like Europe and the UAE.
Chief executive Zaid Al-Qassab, who joined last year alongside new CFO Simon Fuller, said 2024 had been “an important and successful year,” marked by stronger cash generation, improved profitability and a more resilient model.
“We are confident that our world-leading creativity, global reach, and specialist capabilities are the combination desired by clients,” he said.
The results also reflected progress in operational efficiency. M&C’s transformation programme has already delivered £10 million in annualised savings, with a second phase aimed at the middle office expected to save a further £3 million by the end of 2025.
Client retention remains high, with 92% of 2023 revenue preserved. The group also notched over 140 client wins last year, including Ferrari, Carlsberg and L’Oréal. A 21.9% increase in the dividend to 1.95p per share further underscored management’s confidence in the business’s direction.
The company said it remains on track to meet market expectations for 2025."This may provide some relief given noises from some weaker peers (S4 Capital, WPP), albeit we note M&C has a more resilient business mix underpinned in many areas by multi-year agreements and non/less-cyclical activity," said Peel Hunt in a note to clients.
"Management continues to build an efficient platform, launch new offers and increase the availability of its services across its regions making for a multi-vector growth strategy."
The broker reckons the shares are cheap valued at just over eight times prospective earnings and says 'buy' up to a target of 265p. In late morning trading, the stock was up 1p at 170p.