The US government shutdown has hit M&C Saatchi’s revenue, as the 43-day pause in non-essential federal government activity halted the work delivered by the group’s Issues division, which specialises in PR for public organisations.
In an unscheduled trading update, M&C Saatchi said the second half of the year had been “adversely impacted” by the US government shutdown and that it did not expect to recover the revenue this year.
In its interim results in September, M&C Saatchi had said it expected revenue to decline by mid-single digits in 2025 due to the “macro environment” and its Australian business. The group has now downgraded its decline to 7%.
In the same update, M&C Saatchi said it was “exploring options to secure growth and shareholder value” for its Australian business. The options could include a sale for the division, which is under new leadership following a restructure.
The US government shut down on October 1 after Democratic senators refused to approve a spending plan.
M&C Saatchi said there would be no broader impact on ongoing contracts, relationships or long-term growth. The group also announced a share buyback worth £5 million (US$6.5 million) over the next 12 months, the first in 10 years.
Zaid Al-Qassab, the chief executive, said: “I would like to thank all colleagues at M&C Saatchi for their continued commitment to delivering fantastic work for clients in a very tough market context. A challenging macro environment has been further compounded by the unprecedented US Government shutdown, which adversely impacted our high-margin Issues specialism in the fourth quarter.
“We remain confident that our long-term value drivers will deliver growth and margin accretion. We also see significant value upside from our diverse portfolio, deep partnerships with clients, and creativity, and we are resolutely focused on maximising value for clients, colleagues and shareholders, including via our commitment to a share buyback programme."
S4 Capital, the group launched by Sir Martin Sorrell after he left WPP, also revised its forecast downwards today. The group, which owns Monks, expects revenue to be down by just under 10% in 2025, rather than upper single digits as previously reported.
The company said the reduction was “mainly as a result of lower project-based revenue, continued client caution and a slower ramp up of our new-business wins than expected”.
Operational Ebitda at S4 Capital is now expected to be £75 million ($98 million), rather than £81.6 million ($107 million) as previously estimated, despite what the company described as “cost actions”.
