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M&C Saatchi credits UK market for strong first-half profit growth

With pre-tax profits up 46%, the group has every reason to celebrate – with much of it thanks to the UK

M&C Saatchi has reported a strong first half with pre-tax profits up 46% to £7.1m, despite a weaker performance across Asia and Australia, thanks to solid growth in the UK.

The advertising group reported like-for-like revenues up 21% to £70.6m, as operating profits rose by more than a fifth year on year to £7.5m.

M&C Saatchi said that first-half performances were especially good in the UK and the rest of Europe.

The UK, which is the group’s most important market by far – accounting for 43% of total revenue and 58% of pre-tax profits – performed particularly strongly, with revenue up almost a quarter to £31.4m.

M&C Saatchi said the UK was the lead country in converting the group’s international business, with pre-tax profits rising 31% to 4.6m in the first six months.

Asia and Australasia, which is the group’s second most important region – accounting for 33% of total revenue and 16% of pre-tax profits – managed a revenue increase of 8% in the first six months. However, operating profit fell 17% to £1.3m and pre-tax profits 18% to £1.2m.

M&C Saatchi said that its office network in Europe had “made good progress”, with Germany delivering positive results thanks to the addition of more Ferrero brands. Italy won business from Sky, while the Spanish office “made a better contribution”. France, meanwhile, was still experiencing a “tough market”.

Overall, European revenue increased by 26% to £6.6m and pre-tax profits rose 63% to £912,000.

The US posted a £145,000 pre-tax loss, up from the £120,000 loss reported in the same period last year.

The Middle East & Africa region also reported a pre-tax loss, at £37,000 – a huge improvement compared with the £340,000 loss reported in the same period last year.

“The results for the period show significant progress,” said David Kershaw, chief executive of M&C Saatchi. “Trading has been strong in a tough market. We experienced good growth in our UK and other European businesses.”

At 30 June, M&C Saatchi had net cash of £14.8m.

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