Yahoo Finance Pandemic pounds M&C Saatchi profits
Profits at M&C Saatchi plunged nearly 60pc despite a swingeing restructure that cut £13m in costs from the scandal-hit advertising group.
Pressure from the pandemic caused the agency behind a raft of high-profile campaigns to post pre-tax profits of £2m for the six months to June.
Revenues also fell 30pc to £149m, as the "extremely challenging economic conditions" from coronavirus forced it to draw on government support in the UK, America, Australia and Singapore.
The company said its UK business suffered from companies freezing their advertising budgets during the pandemic.
Its sports and entertainment arm was hit particularly hard by upheaval to live events, including delays to the 2020 Euros and the Olympics.
The financial update came as its shares remained suspended after missing a September deadline to file its annual results to December 2019.
M&C Saatchi now expects them to be filed by early November despite stating on September 30 that the process would be complete "within a matter of weeks".
The agency is attempting to bounce back after becoming ensnared in an accounting scandal last year that caused shares to dive and prompted founder Maurice Saatchi and three directors to quit.
The company said revenues should be "marginally stronger" in the second half of the year, with profits predicted to hit £4m.
Chief executive David Kershaw said he was "hugely encouraged by the resilience of the business" in the face of coronavirus and was "looking ahead with optimism".
"We are refocusing our business to ensure it is in the best possible shape to thrive," he added.
"Additionally, we are now well advanced in our strategic review and it is clear that we have both the strength and the potential to take advantage of the considerable long-term opportunities we see ahead of us."
M&C Saatchi said costs were down 11pc to £99.2m for the half year following a global restructuring prompted by the strategic review.
Those savings were underpinned in part by the closure of its Los Angeles agency in May and job cuts at its UK business.
Plans are also underway to cut its office space by a quarter in the UK, Australia and Singapore.
The agency, which expects operating costs to be £30m lower by the end of the financial year, made no half-year payment to shareholders.
Advertising mogul Lord (Maurice) Saatchi, considered one of the greatest admen of his generation, resigned in December after the accounting error caused shares to tank 45pc
The Tory peer left as part of boardroom clear-out, which also saw non-executives Lord Dobbs - author of political thriller House of Cards - Sir Michael Peat and Lorna Tilbian also leave the company
The resignations came after it was discovered that M&C Saatchi had overstated profits by £11.6m despite auditor KPMG signing off the accounts.
Alongside the half-year update, M&C Saatchi said it would also convert some share schemes into cash bonuses to prevent the dilution of shares for investors.
