M&C Saatchi warns sports and entertainment divisions face losses over Middle East conflict
Shares in advertising giant M&C Saatchi languished near a five-year low on Monday, as the company grappled with a perfect storm of geopolitical unrest and harsh economic headwinds that have savaged its annual profits.
Middle East Expansion Meets Conflict
The immediate and most specific threat highlighted by the company stems from the conflict in the Middle East, a region where M&C Saatchi has been aggressively expanding. The firm warned the unrest is likely to “significantly impact” its sport and entertainment and consumer-facing business units. This is a direct blow to a strategic growth area: the Middle East now represents around 6% of group revenues.
This concern follows a period of rapid investment. M&C Saatchi Sport & Entertainment launched its Middle East operations in November 2024, and in May 2025 the group acquired Dubai-based agency Dune 23 to bolster its sports marketing and youth culture specialism in the Gulf, adding over 40 specialists. The push yielded spectacular initial results, with regional revenues surging 46.6% year-on-year in the first half of 2025. For the full year, Middle East revenue grew 3.6% to £11.6 million, but the board has now signalled that this momentum is in jeopardy.
The implications extend beyond one company. Industry analysis suggests a prolonged Middle East conflict could threaten tens of billions of dollars in global advertising growth, with sectors like automotive, food, leisure, and travel expected to slash spend due to oil price volatility, supply chain disruption, and squeezed consumer wallets.
Profits Halved in Tough Year
The geopolitical turmoil compounded an already difficult year. M&C Saatchi reported that pre-tax profits collapsed by 74.6% to just £4.6 million for 2025, down from £18.1 million the previous year. On a like-for-like basis, which adjusts for acquisitions and disposals, the decline was a stark 34% to £19.4 million.
Group revenues fell by 12.1% to £347.4 million, with like-for-like net revenue down 7.3% to £204.7 million. The company’s operating profit more than halved to £10.2 million, leading to a severely contracted operating profit margin of 4.8%, down from 9.7% in 2024.
Several other factors converged to create what Executive Chair Dame Heather Rabbatts called a “tough market context.” A US government shutdown in the final quarter of 2025 hit its high-margin public affairs division, while earlier US tariff fallout also dented revenues. Weak consumer sentiment, particularly in Australia, led to a 22.3% net revenue fall in the Asia-Pacific region; the group closed its Australian media buying business in September 2025.
Cost-Cutting and a Strategic Pivot
In response, the company is battening down the hatches. A global efficiency and restructuring programme secured £7 million in savings in 2025, with a further £5 million in annualised savings delivered through a second phase focused on centralisation.
In a notable shift of capital allocation, M&C Saatchi has scrapped its final dividend for 2025. The £2.4 million that would have been paid out—matching the 1.95 pence per share dividend of 2024—will be redirected to an enhanced share buyback programme, which the board believes will create greater value for shareholders.
Dame Heather Rabbatts stated the board’s focus is now on simplifying the business, refining its market offer, and “unlocking the intrinsic value of the company.” Despite the uncertainty, the company is confident in targeting net revenue and operating profit growth for 2026, in line with market expectations, noting that first-quarter trading has been satisfactory. This outlook comes amid a leadership change, with former CEO Zaid Al-Qassab having left the company in early April 2026.
