LONDON — Huntsworth has reported like-for-like revenue growth of 1.2% in 2016, weighed down by continued decline at Grayling, which saw revenues drop 17.4% during the year.

The group reported total revenue of £180.1m in 2016, compared to £168.4m in 2015. Grayling's revenues slid to £53.9m from £63.2m thanks to "challenging trading conditions" in the US, where it has restructured the business considerably, and the Middle East/Africa, where client losses included the lucrative Qatar Foundation business and the Kenya Tourism Board project.

"During the second half of the year we accelerated Grayling’s restructuring, removing unprofitable agencies and closing the state lobbying business in the US, and sold Hudson Sandler to management with the group retaining a 25% minority stake," said Huntsworth CEO Paul Taaffe. "Since the year end Whiteboard Associates has also been sold to management, allowing Grayling US to focus on its PR offering."

Grayling also made a loss of £0.8m during 2016, although Huntsworth hopes that continued restructuring of the business will help it return to profitability this year. "Grayling is now smaller, more nimble and more focused, and we remain confident that the work we have done has positioned this division to return to improved profitability," said Huntsworth chairman Derek Mapp.

There was better news from Huntsworth's other firms, with Huntsworth Health again leading the way by growing 13.8% to £90.8m. Citigate was up 4.5% to £22.1m, while Red grew 4% to £13.3m on an operating margin of 20.3%.

"Huntsworth Health was the outstanding performer again this year with double-digit revenue and profit growth, and the organic development of new agency offerings within the consumer-focused Evoke Health," said Taaffe. "Health remains the key asset within the Group, representing over 50% of our revenues, and will be the focus of our development in the coming year."

"Red continued to grow well in a very competitive and sluggish market, holding high margins and continuing to win awards for the high quality work it does for its blue chip client base," added Taaffe. "Citigate Dewe Rogerson has made a welcome return to revenue and profit growth while making a number of changes to expand into more markets."

Overall group operating profits before highlighted items increased by £2.7m to £18m, generating an operating margin before central costs of 10%, up from 9.1% in 2015. After total highlighted operating expenses of £32.5m, the group's statutory reported operating loss was £14.5m, compared to £37.8m in 2015.

Client losses ensured that Grayling's Middle East and African business was hardest hit during the year. In the UK, Grayling revenues were down 23% while Continental Europe fared relatively better, declining 6%.

Citigate established a presence in New York during the year, with its US/UK revenues up 12% on a like-for-like basis. The Asian business was up 1% but Continental Europe declined 2% while maintaining strong margins.

Red's performance was underpinned by some major campaigns for key clients Boots, McDonald's and Heathrow Airport, along with new business from Robinson’s, Spotify, Gumtree and Trainline.

Huntsworth Health, now firmly established as the group's largest division by revenue and profit, remains the standout performer. Growth was driven by the US, where our digital consumer agency Evoke Health grew like-for-like revenues by 12%, strategic medical agency ApotheCom was up 19%, and PR firm Tonic Life Communications reported growth of 15%.

Huntsworth incurred restructuring costs of £1.6m in 2016, which included reduction in overheads, property consolidation and office closures, including Grayling's withdrawal from Sweden.

"The group is now positioned for continued growth and 2017 has started well," said Taaffe. "Huntsworth Health continues to grow strongly on the back of multiple client wins, Grayling, Red and CDR are making positive progress, and together with favourable exchange rates, the outlook for 2017 is positive."