Holmes Report 26 Jul 2016 // 10:53AM GMT
LONDON — Huntsworth has reported revenue growth at three of its four divisions in the first half of 2016, but a 14.7% like-for-like revenue decline at Grayling helped to bring overall growth down to 0.3%.
Pre-tax profits were up 21%, boosted by strong performances from Huntsworth Health (revenue up 11.4% to £41.5m), Citigate Dewe Rogerson (+4.4% to £10.7m) and Red (+3.5% to £6.6m).
Overall revenues for the period reached £86.6m, with profit before tax of £6.4m. However, Huntsworth CEO Paul Taaffe noted that "Grayling is experiencing challenging trading conditions, particularly in the US, which is the main focus of our final phase of restructuring, but also in the Middle East and African region, which has suffered client losses and delays in client renewals."
Earlier this year, for example, Grayling lost its hold on its lucrative Qatar Foundation business, causing the firm to scale back its presence in that market. The firm posted a £0.1m loss for the period.
Taaffe said that Grayling's restructuring "should deliver upside" in 2017. While continental Europe remains profitable, the firm has reshaped its US offering considerably this year, exiting the state lobbying business and reducing overheads and services.
Grayling's underperformance, continued Taaffe, means that the carrying value of the firm's goodwill has been re-evaluated, leading to an impairment of £15.0m.
Once again, Huntsworth Health's was the group's star performer, with double-digit revenue and operating profit growth. Much of this comes from the US market where digital consumer agency Evoke Health grew like-for-like US revenues in by 21.9%, medical communications and market access agency ApotheCom grew like-for-like US revenues by 23.3%, and PR agency Tonic Life Communications grew like-for-like US revenues by 11.3%.
Taaffe also noted that Huntsworth continues to "adjust the scope and cost of central services, to be more appropriate for a group of our current size, and we will make further changes during the second half of the year to achieve this."
Overall group operating profits before central costs increased by £0.8m to £10.7m, generating an operating margin before central costs of 12.4%, up from 11.9% in 1H 2015. After total highlighted operating expenses of £15.2m, the group's statutory reported operating loss was £7.9m, compared to £44.8m in 1H 2015.