M&C Saatchi Posts Challenging 2025 Results, Shifts from Dividend to Enhanced Buybacks Under New Leadership

Headline numbers: revenue and profit down, cash conversion impresses

M&C Saatchi’s 2025 was a slog. Like-for-like (LFL) net revenue fell 7.3% to £204.7 million, with LFL operating profit down 26.1% to £24.9 million. LFL adjusts for FX, acquisitions/disposals and exceptional items – a cleaner read on underlying trading. Statutory results, which include everything, were weaker still.

Despite that, cash generation held up well and net cash edged higher. The Board has also shifted capital returns from dividends to buybacks under new Executive Chair, Dame Heather Rabbatts.

Key metric	2025	2024	Change
LFL net revenue	£204.7m	£220.9m	-7.3%
LFL operating profit	£24.9m	£33.7m	-26.1%
LFL operating margin	12.2%	15.3%	-310 bps
LFL profit before tax	£19.4m	£29.2m	-33.6%
Statutory net revenue	£210.0m	£231.4m	-9.2%
Statutory operating profit	£10.2m	£22.5m	-54.7%
Basic EPS (statutory)	(1.9)p	9.6p	n/a
Basic EPS (LFL)	9.4p	17.0p	-44.7%
Net cash	£13.3m	£11.8m	+£1.5m
Operating cash conversion	94%	85%	+9 pps

Management says results were in line with November 2025 guidance. The shares now pivot to what happens under the new leadership and the 2026 outlook.

What drove the shortfall in 2025

Three external hits did the damage: an “unprecedented” US Government shutdown in Q4, the US tariff fallout in Q2 and Q3, and a weak macro backdrop – notably Australia. When the US Government shuts down, M&C’s high-margin Issues work stops but the teams must be retained, so margins take a double whack.

Statutory profit was further depressed by one-off items (£9.1 million pre-tax), restructuring and the September closure of the Australian media buying business. Group central costs fell sharply to £6.1 million (from £12.4 million) thanks to the absence of an LTIP charge, higher recharges and 2024 savings annualising.

Dividend paused in favour of buybacks

The Board intends to reallocate what would have been the 2025 final dividend to an enhanced share buyback programme, arguing this will create greater shareholder value. That decision remains subject to formal Board approval. The Company paid a 1.95p dividend for 2024; there is no 2025 final dividend proposed under this plan.

Why it matters:

• Buybacks can lift earnings per share (EPS) if executed at attractive prices and funded by surplus cash flow.
• M&C Saatchi is capital light and targets 80%+ operating cash conversion over the medium term. It delivered 94% in 2025, which supports the shift.
• The exact buyback quantum is not disclosed, so investors will watch for the programme size and pace.

Specialisms: Media shines, Issues set for a rebound, Consulting the laggard

M&C Saatchi’s mix has evolved – Non-Advertising now represents 67% of LFL net revenue. 2025 performance by Specialism was mixed:

• Advertising: £68.5 million, down 8.9%. Australia was the drag; excluding Australia, Advertising would have declined by only 1%.
• Issues: £54.3 million, down 4.1%. The US Government shutdown hurt a high-margin area. Management expects a return to growth in 2026 with a full 12 months of US Government spend and a broadened client list.
• Passions & PR: £32.0 million, down 11.4%. Tough market, reduced spend and a client loss. Sport & entertainment remains a medium-term growth focus; acquisitions of Dune 23 and The Women’s Sports Group were completed for £1.7 million.
• Consulting: £24.7 million, down 18.8%. Project deferrals, particularly in Australia, and US policy changes weighed. Challenges expected to continue in 2026.
• Media: £25.2 million, up 11.5%. Strong UK and APAC wins; demand for performance media, digital expertise and AI/data-led measurement. Management expects further growth in 2026.

Margins followed the mix: Non-Advertising operating margin fell to 17.1% (-8.8 pps) given the Issues slowdown, while Advertising held an 11.3% margin, reflecting cost control and resizing in Australia.

Regional trends: Australia drags; US and Europe more resilient

Regionally, the UK remains the largest contributor at 50% of LFL net revenue, boosted by the inclusion of Issues. 2025 LFL net revenue movements:

• UK: down 4.6% – Media growth offset by softer Advertising and Consulting; Issues affected by the US shutdown.
• APAC: down 22.3% – predominantly Australia, where weak consumer sentiment hit spend.
• Americas: down 1.9% – strength in US Advertising offset by Consulting delays.
• Europe: down 3.2% – strong Advertising in Italy, temporary weakness in Germany.
• Middle East: up 3.6% – Advertising growth and a new local sport & entertainment offer; conflict expected to temper 2026 S&E performance.

Cost actions and AI: foundations for margin repair

The transformation and efficiency programmes are doing the heavy lifting: £7 million of annualised savings from the latest global efficiency and restructuring, plus a further £5 million from Phase Two centralisation and consolidation. These stack on top of £10 million annualised savings from Phase One completed in 2024.

Alongside that, the Group is embedding data and AI across specialisms to support creativity and performance measurement, under its Cultural Power proposition. If revenue growth returns, these savings should translate to operating margin improvement.

2026 outlook: targets set for growth and margin improvement

Q1 2026 trading is in line with expectations. For 2026, the Company targets net revenue growth and operating profit growth, in line with market estimates, with positive momentum in Issues and Media and regional support from the US and Europe. Management also targets improved operating margin and expects operating cash conversion of over 80%.

Risks remain: macro uncertainty persists, and the conflict in the Middle East is likely to significantly impact sport & entertainment and parts of the consumer-facing book.

Leadership and governance: a reset under Dame Heather Rabbatts

Dame Heather Rabbatts became Executive Chair in April 2026 after serving as Non-Executive Chair. The Board has been refreshed, with Nicholas Shott joining as an Independent Non-Executive Director and Vin Murria appointed to support value creation. The strategic message is clear – simplify, refine the go-to-market offer, and “unlock intrinsic value”.

Investors can find the results presentation replay on the Company’s website: mcsaatchiplc.com.

What I’m watching next

• Issues recovery: does a full year of US Government spend drive revenue and margin back up?
• Australia stabilisation: APAC was the main drag; any green shoots would help sentiment.
• Buyback detail: size, timing and execution price – not disclosed yet and subject to Board approval.
• Margin rebuild: how quickly do the £22 million of cumulative annualised savings flow through as revenue returns?
• Media momentum: can double-digit growth continue through 2026 on the back of performance media and AI-led measurement?
• Cash discipline: net cash of £13.3 million, £8.0 million drawn on the £50 million RCF; keeping conversion >80% is key.
• Client retention: 94% retention supports resilience, but new business wins will determine pace of growth.

My take: a reset year, but the cash engine still runs

2025 was bruising, with external shocks landing squarely on M&C Saatchi’s highest-margin work. The statutory loss and lower LFL profits reflect that reality. The positives: strong 94% cash conversion, modestly higher net cash, sharply lower central costs, and clear cost-saving run-rate heading into 2026. Media is growing, and Issues should rebound if US Government activity normalises.

The switch from dividends to buybacks makes sense given cash generation and the Board’s view that the shares are undervalued – though we need the specifics. Execution now matters more than rhetoric: deliver growth in Issues and Media, hold the line in Australia, and let the savings drop through. If those boxes are ticked, the ingredients are here for EPS and margin improvement in 2026.