LONDON — Despite overall gains, Huntsworth on Tuesday reported a 5.1% year-over-year decline in its communications revenue during 2018.

The communications division, which includes Grayling, Red and specialist financial agency Citigate Dewe Rogerson, reported revenue for the year was £73.4m (2017: £77.6m), which represents a decline of 5% on a like-for-like basis. Operating profit of £6.0m(2017: £7.0m) includes a £1 million of one-off reorganisation costs. Excluding these costs, profits were flat year on year, Huntsworth said.

The report reflects the continuation of challenges shown in Huntsworth's earnings for all of 2017 (albeit with slight improvement), during which comms revenues fell by 7%. That year followed an even more difficult 2016, during which Huntsworth was hit financially by closing loss making practices in Grayling.

In announcing the results, Huntsworth said the dip in comms revenues was in line with that strategy as part of the company's overarching push to build out its healthcare division.

During the last year, Huntsworth acquired three healthcare marketing firms — AboveNation Media, Giant Creative Strategy and Navience Healthcare Solutions. The group now has two distinct areas of focus: healthcare, which is made up of medical, marketing and immersive divisions; and communications.

"While the group is firmly focused on developing and adding to its healthcare assets, the communications division continues to remain an important part, contributing 15% of profits before central costs. This remains a mixed group of agencies in terms of their individual performance and development, although it has been pleasing to see improving performance in key agencies this year," CEO Paul Taaffe said in a statement. "One-off costs borne within the year totalled around £1m, related to further reorganising and right-sizing elements of the offering, and the benefits of these will be seen in improved financial returns in the coming years."

Grayling revenues fell by 7.6% on a like-for-like basis to £38.3m (2017: £41.7m), whilst one-off costs of around £1 million contributed to an overall loss for the period of £0.4m (2017: profit of £0.7m). This performance is largely the result of a decline in profitability in Grayling Europe and one-off contract profits in the Middle East last year, which offset improvements in profitability in the UK and the US, he said.

Red’s revenue declined by 4% on a like-for-like basis in the period, which was expected following the loss of its largest client in H2 2017 via a procurement-led process. Performance has improved sharply in H2 with the agency back in growth mode as the comparatives unwind and the benefits of recent client wins start to come through. "We anticipate this growth trend to continue in 2019. Margins continue to hold at strong levels," Taaffe said.

Citigate Dewe Rogerson revenues were broadly flat on the prior period at £21.9m but profitability improved sharply by 19% to £4.1m. Margin increased to 18.8% (2017:15.9%) due to the impact of last year’s restructuring and the focus on more profitable clients. All business units made progress against the prior year with the exception of the Netherlands where the transaction environment was softer than last year, he said.

Overall, however, the year was up for Huntsworth, which reported revenue growth of 14% (1.4% on a like-for-like basis) to £225.0m (2017: £197m). Headline operating profit rose 26% (12% on a like-for-like basis) to £33.2m (2017: £26.4 million), representing a margin of 14.8% (2017:13.4%.