UPDATE 2-Ad agency M&C Saatchi expects boost from World Cup

Thu Mar 20, 2014 12:33pm EDT

* Sees 7-8 pct like-for-like revenue growth in 2014

* Revenue rises 5 pct to 177.4 mln stg in 2013 (Adds CEO, analyst comments, details, background; updates share movement)

By Esha Vaish

March 20 (Reuters) - Ad agency M&C Saatchi Plc said it expects 7-8 percent growth in like-for-like revenue this year, pinning its hopes on contract wins and the FIFA World Cup to make up for a strong pound.

The company's forecast compares with larger rival WPP Plc's expectation of at least 3 percent growth, excluding currency translations.

M&C Saatchi CEO David Kershaw told Reuters that he expected the company to grow at twice the rate of bigger rivals as its strategy of absorbing startups and having entrepreneurs head offices helped offer services that larger firms are unable to.

Kershaw said the company, which gets nearly half of its revenue from outside the UK, expects to expand in Asia and boosts its presence in the United States.

"We're looking for the U.S. business to take off, which can be quite a game changer for them if that gets going, they'll probably grow quite rapidly for a number of years," said N+1 Singer Capital Markets analyst Johnathan Barrett.

Barrett said he expected M&C Saatchi's revenue to grow by about 6.5 percent in 2014.

Numis Securities analysts raised to 8 percent from 6 percent their 2014 organic revenue growth estimate for the company.

M&C Saatchi - founded by brothers Maurice and Charles Saatchi in 1995 after they were ousted from Saatchi & Saatchi -said it expected the FIFA World Cup later this year in Brazil and the Olympics in 2016 to buoy results.

The agency, which created the UK government's recent ads on cybersecurity, said Real Madrid star Cristiano Ronaldo had retained it to promote his underwear brand, CR7, ahead of the World Cup. M&C Saatchi handled the launch of the brand in 2013.

CEO Kershaw said the company would also promote the English Rugby interests of long-standing client O2 this year.

M&C Saatchi will manage the US Olympics team's sponsorships when it competes in 2016.

The agency said full-year revenue rose 5 percent to 177.4 million pounds ($295 million) as it brought on board new clients such as the UK government and coffee chain Douwe Egberts, and won contracts from existing customers including De Beers and chemical-maker BASF.

M&C Saatchi's shares closed marginally down at 296 pence on the London Stock Exchange on Thursday.

M&C Saatchi had a market capitalisation of about 187 million pounds, while WPP was valued at about 16 billion pounds. ($1 = 0.60 British Pounds) (Reporting by Esha Vaish in Bangalore; Editing by Gopakumar Warrier and Sriraj Kalluvila)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.