April 20 (Reuters) - M&C Saatchi warned on Monday that the Iran war would significantly hurt parts of its  business, after pretax profit at the British marketing group dropped by nearly three-quarters last year.

The Iran war has upended travel in the Middle East and caused the cancellation or postponement of events including Formula One and tennis, hitting the company's sport and entertainment business that drives campaigns for global brands and works with athletes on commercial partnerships, and its consumer-facing advertising division.

M&C Saatchi had expanded its Middle East business in recent years, betting on the United Arab Emirates' rapidly growing market. The region accounted for about 6% of group revenue last year. 

CONFIDENT IN OUTLOOK

"Whilst we expect continued market uncertainty, we are confident in targeting net revenue growth and operating profit growth in 2026, in line with current market expectations," Chairperson Heather Rabbatts said in a statement. 

Rabbatts took on the executive chair role after CEO Zaid Al-Qassab stepped down last month. The company is still in the process of appointing his successor. 

Analysts at Berenberg said the confidence in the 2026 outlook was reassuring, noting M&C Saatchi's exposure to higher-margin government-related work and more resilient specialisms such as its media division and "Issues", which handles climate, health, defence, and human rights communications.

Pre-tax profit sank 75% in 2025 to 4.6 million pounds, hit by restructuring costs and weak performance in the UK and Australia.

The company, which also offers public relations and digital media services, has struggled with a drop in client spending and delayed contract signings, prompting a business restructuring.

M&C Saatchi said first-quarter trading was in line with its expectations despite the tough economic conditions.  

Shares in the company, which have lost 28% of their value over the last year, were around 1% lower by 0913 GMT.

($1 = 0.7414 pounds)

(Reporting by Nithyashree R B in Bengaluru; Writing by Yadarisa Shabong; Editing by Subhranshu Sahu, Kirsten Donovan)