M+C Saatchi has cut its outlook for 2025 after a late-year hit to one of its most profitable divisions, blaming disruption from an extended US Government shutdown.
In an update to the market, the listed advertising and marketing group said trading in the second half has been “adversely impacted” by the shutdown, which it described as the longest in US history.
The disruption has weighed on its Issues specialism – a public sector and policy-focused arm that typically delivers a significant share of fourth-quarter revenue and profit.
While the London-based company said that the shutdown has not damaged client relationships or longer-term contracts, it confirmed that the lost income will not be recovered before year-end.
It now expects like-for-like net revenue to fall by around 7% for the 12 months to 31st December 2025.
Excluding its Australia business, which it has taken significant actions to reshape, it said the decline would be closer to 1.5%.
Operating profit is now forecast to land between £26 million and £28m, giving an operating margin of roughly 12.5% to 13% – lower than the expectations set out at the interim stage.
Australia has been a clear area of focus for management this year and the company reiterated that it has already carried out significant structural changes in the region, including installing a new management team, running a group-wide restructure and resetting overhead costs.
The moves were framed as laying the groundwork for a return to growth and the business is continuing to explore options that could improve performance and shareholder value there.
Despite downgrading guidance, the MarTech pointed to the strength of its balance sheet and said it is moving ahead with a share buyback programme.
The board has committed up to £5m to repurchase shares over the next 12 months, with the option to extend or increase the programme depending on market conditions and performance.
The creative communications and consulting group provides data-led services across brand strategy, advertising, digital marketing, PR, growth strategy and design, and floated over two decades ago in 2004.
At the start of this month, it entered negotiations to sell its M+C Saatchi Performance (MCSP) business to Social Chain owner Brave Bison in a £50m deal.
M+C Saatchi expects its Issues specialism to rebound to double-digit year-on-year growth in FY2026.
It said the division benefits from deep public sector relationships, a healthy pipeline of new opportunities and ongoing demand for its work.
More broadly, the group said it has continued to make progress on its operational transformation during a year marked by macro uncertainty and geopolitical volatility.
It remains on track to complete a £12m combined annualised cost-saving programme and believes its integrated operating model is taking shape across practices.
“I would like to thank all colleagues at M&C Saatchi for their continued commitment to delivering fantastic work for clients in a very tough market context,” said M+C Saatchi chief executive, Zaid Al-Qassab.
“A challenging macro environment has been further compounded by the unprecedented US Government shutdown, which adversely impacted our high-margin Issues specialism in the fourth quarter.
“We remain confident that our long-term value drivers will deliver growth and margin accretion.
“We also see significant value upside from our diverse portfolio, deep partnerships with clients, and creativity, and we are resolutely focused on maximising value for clients, colleagues and shareholders, including via our commitment to a share buyback programme.”
The trading update has not been well received by investors, with shares having already dropped by 12.7% to 110p in the first hour of trading.