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Mirriad Advertising PLC on Friday said it expects revenue for 2022 to be flat due to sales in China tumbling on weak market conditions.
Shares in Mirriad were down 39% at 9.02 pence in London on Friday morning.
The advertising agency expects revenue for 2022 to be flat at around £2 million, primarily due to ‘significantly’ weaker than expected market conditions in China.
Revenue for the first half of the year nearly halved to £577,000 from £1.1 million a year before as a result of strict Covid-19 lockdowns in China. Revenue from Chinese operations dropped by 85% to £123,000 from £820,000 a year ago.
‘The board no longer considers it prudent to budget for the anticipated strong bounce-back in China. The company has taken decisive action to address this challenge, with an orderly wind down in China agreed for the end of the current Tencent contract,’ said Mirriad.
The London-based marketing agency expects to save around £1 million from this cost saving decision, and it plans to prioritise management and spending focus in the US.
Cash balances at the end of June reduced to £17.7 million from £29.8 million a year before. However, year-end cash is expected to be better than market forecasts due to cost savings and lower than budgeted bonus provisions.
Higher revenue is also expected for the second half of the year due to the seasonal nature of advertising markets, Mirriad said.
Outside of China, the company's operations held up well. US revenue increased by 57% in the first-half to £418,000 from £266,000 a year prior, now accounting for 72% of the company's total revenue.
‘Mirriad is extending its lead in the in-content advertising market with an augmented focus and position in North America,’ said Chief Executive Officer Stephan Beringer.
Mirriad's wider cost control programme is expected to deliver £2.5 million in savings, most of which will be achieved in 2023.
CEO Beringer said: ‘Our positive US momentum is diluted by the disappointing results of our operations in China, stemming from the unexpected length of stringent lockdowns and a challenging macro environment overall. The decision to make an orderly wind down of our operations at the end of the Tencent contract does not impact our overall route to scale, which is rooted in standardisation and integration with the wider advertising ecosystem and enhancing our advanced programmatic capabilities.’
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