M&C Saatchi has outperformed analyst expectations with pre-tax profits of £7.8m and like-for-like revenue up 18.7% year on year to £43m for the six months to the end of June, but has said it remains "cautious" about the medium-term economic climate.

The advertising group, owns ad agency network M&C Saatchi and media operation Walker Media, saw pre-tax profits surge by 107% year on year, with operating profit up 174% to £7.7m.

It said that despite a performance ahead of analyst expectations, economic uncertainty meant it expected the full year to remain in line with current forecasts. It added that it had "felt the effects" of the worsening economic climate in its US and Spanish operations.

"Despite this, our global network remains strong and we have continued to win new business across our divisions," said the M&C Saatchi chief executive, David Kershaw. "The outlook for the full year remains in line with management expectations."

M&C Saatchi said that its UK operation had "enjoyed an excellent first six months" with like-for-like revenue growth up 14.4% to £25.2m and operating profit up 45% to £4.5m.

The group has improved its UK operating margin from 14% in 2007 to 19.7% for the first six months of this year.

In Europe, the company said it continued to see "good growth" - apart for the "disappointing" performance of its Spanish office with "no immediate signs of improvement" in the local economy - with like-for-like revenue up 95% year on year to £4.1m.

The group said the performance was driven by the Paris office, while the Berlin office also had a "good first half".

In its Asian and Australian businesses, like-for-like revenue growth increased by 20.6% year on year to £14.2m.

The group said this was driven by the "continued recovery" of the Australian operation.

However it will be affected significantly when the loss of the Tourism Australia account is felt from the fourth quarter.

The rest of the Asian region contributed an overall revenue increase of 20% year on year for the period, led by the Malaysian office.

In the US, like-for-like revenue decreased by 7% year on year to £1.5m, following the closure of the New York office in April last year, with a 46% fall in operating profit to £200,000.

"Conditions continue to be challenging and to date we have seen no significant signs of improvement," the group said, adding that its Los Angeles office had "started to feel the effects of the economic slowdown".

"At this time the uncertain economic environment leads us to be cautious about medium-term visibility," Kershaw said, commenting on the outlook for the group. "However, our balance sheet remains strong and we will continue to invest in markets which we believe will position us well for growth in the long term."

In May, M&C Saatchi took the decision to close its loss-making operations in Singapore and Thailand.

It also acquired the majority stake of digital ad agency Play.

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