M&C Saatchi PLC shares dropped on Wednesday, after it said a ‘more challenging’ trading environment has continue into the second quarter of 2023.

Ahead of its annual general meeting, shares in the London-based advertising agency were down 15% to 148.00 pence each in London on Wednesday morning.

M&C Saatchi said that more challenging environment has hurt the pace of the business, particularly in the Advertising and Media specialisms.

However, it said the Passions, Consultancy and Issues specialisms have continued to perform ‘strongly.’

Looking ahead, M&C Saatchi expects a ‘small’ decline in like-for-like net revenue for all of 2023. It remains confident in delivering year-on-year headline pretax profit and headline operating margin improvement.

‘This will be achieved through a combination of the high operational gearing inherent in the business model, targeted cost savings and the global cost efficiency programme,’ M&C Saatchi explained.

Based on this, the company said headline pretax profit is expected to be significantly weighted towards the second half, although revenue is expected to be more evenly spread.

M&C Saatchi recorded a pretax profit of £5.4 million in 2022, more than halved from the £21.6 million in 2021, hurt by a one-off expense. Headline pretax profit rose 17% to £31.8 million from £27.3 million. Revenue was £462.5 million, up from £394.6 million.

M&C Saatchi added that it remains confident in its strategy and the medium-term growth targets.

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