M&C Saatchi set to report better than expected Q2 financial results

M&C Saatchi is set to report a better than expected second quarter performance with a small underlying profit before tax for the six months to 30 June 2020.

In a trading update released this morning, the agency group said that the initial results are "encouraging and more favourable than management's expectations" given the uncertain economic environment caused by the coronavirus outbreak.

The business said that its performance was "particularly resilient" in the second quarter. It pointed out new assignments from clients including TikTok, BP, Bayer and telecoms company Tele2.

The trading update said: "Although revenue declined in H1 2020 compared to H1 2019, the better than expected second quarter performance and the swift and decisive action taken in reducing costs has resulted in a relatively stable first half year performance, stronger than was anticipated at the start of the pandemic."

The agency group, which has had a tough time of late, having been suffering from the fallout of an accounting scandal before the virus crisis, explained that its balance sheet "remains strong".

This has improved over the past month as the group said it has total cash of £59 million as of 23 July 2020, compared with £52 million as of 23 June 2020.

When including a £36 million bank loan and a £5 million overdraft facility, which remains undrawn, M&C Saatchi is left with net cash of £23 million, compared with £16 million on 23 June.

It has also secured a £7 million government loan in the UK. However, it said that this is "entirely precautionary", given the current cash balance, and it does not expect to draw on this in current trading conditions.

M&C Saatchi had initially expected to release its financial results for the year ended 31 December 2019 by the end of July but is now looking at releasing them before the end of August.