M&C Saatchi warns Middle East conflict will hit business as it reveals slump in profits
M&C Saatchi has warned that its sport and entertainment business is likely to take a ‘significant’ hit from the Middle East conflict.
It came as the advertising firm revealed a slump in profits amid a ‘tough’ market as it struggled with weak client spending and delayed contract signings linked to the US government shutdown.
Revenue dipped 7.3 per cent in the year to December 2025, while operating profit plummeted 26.1 per cent to £24.9million.
The group said first-quarter trading had been in line with expectations but warned that macroeconomic challenges remain and the Middle East conflict ‘is likely to significantly impact’ its sport, entertainment and consumer-facing business.
Executive chair Dame Heather Rabbatts said: ‘Whilst we expect continued market uncertainty, we are confident in targeting net revenue growth and operating profit growth in 2026, in line with current market expectations.’
M&C Saatchi has warned that the Iran war will affect its consumer facing business
Advertising revenue fell 8.9 per cent to £68.5million, largely driven by challenging macro conditions in Australia, which more than offset continued growth in the US and Europe.
Its consumer-facing ‘Passions and PR’ arm suffered an 11.4 per cent decline in revenue to £32million in a ‘tough market context’.
It warned that its PR business continued to be affected by exposure to the ‘softer’ UK market, while sport and entertainment would be hit by the ongoing conflict.
M&C Saatchi said it planned to scrap its dividend payment and reallocate the amount into an ‘enhanced’ share buyback programme, just weeks after announcing plans to hand up to £4.5million back to shareholders.
Shares dipped 0.64 per cent to 114.26p this morning.
It has been a tumultuous period for M&C Saatchi, which last month announced that Zaid Al-Qassab, who had been chief executive for less than two months, would stand down after coming under shareholder pressure.
It has battled falling revenue and fears that artificial intelligence could hit demand for some of its services.
Mark Crouch, market analyst for Etoro, said: ‘The picture isn’t without encouragement. Cash generation remains robust… [and] management’s decision to pivot away from dividends towards an enhanced share buyback also signals confidence in the underlying valuation, even if it may divide income-focused investors.’
He added: ‘Guidance for 2026 appears steady rather than ambitious, with growth expected to track market expectations amid ongoing volatility.
‘The focus on simplification, alongside increased use of data and AI, should support margins over time. However, exposure to macro uncertainty and geopolitical risk, particularly in sport and consumer sectors, means execution will be key to rebuilding momentum.’
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