Bottom Line: Suffering Saatchi

ONLY AN advertising agency could try to present itself as a victim of its own success having lost out in a three-way battle to retain the Chrysler account.

The hard truth for Saatchi & Saatchi is that the Chrysler loss, coupled with its forced resignation from Helene Curtis because of conflicts of interest with Procter & Gamble, will knock pounds 30m off the group's revenues.

Making that up would be difficult, even in a buoyant market, but Saatchi is now warning that spending by its American clients next year is likely to be level with, if not below, this year's. Coupled with a downturn in key European markets, that moves its target of a 10 per cent margin, originally pencilled in for 1996, even further out.

Saatchi remains confident that the growing tendency of clients to focus on brand support, rather than one-off promotions, will bring extra business, but it admits that progress will be slow. In the meantime it is once again taking the axe to staff numbers, spending an extra pounds 10m on redundancies on top of the pounds 5m already announced and, finally, quitting its lavish Berkeley Square offices.

Even those savings will not be enough to prevent a fall in this year's profits from a predicted pounds 25m to pounds 19m, and to perhaps pounds 40m, from an expected pounds 45m, next. Even after yesterday's 23p fall to 157p, the shares are on a 1994 multiple of more than 20 times - or about 50 per cent above the market. Even the best ad-man would find that hard to justify.