Arun Sudhaman 10 Apr 2015 // 7:28AM GMT
LONDON—UK PR holding group Huntsworth has reported a decline in both revenue and profit in 2014. The group's operating profit fell to £18.6m from £23.6m in 2013, with revenues down 0.9% to £164.7m, on a like-for-like basis.
The group said that the decline was led by its largest PR agency brand, Grayling, which is currently without a CEO following the departure of Pete Pedersen at the start of this year.
Huntsworth has struggled to grow since the recession of 2008, as we explored last year, with revenues declining 1.3% in 2013. The group has seen considerable change over the past 12 months, with founder and CEO Lord Chadlington stepping down, replaced by former H+K Strategies CEO Paul Taaffe, whose hire — and ability to revive growth — we analysed last month.
Huntsworth also brought on a new chairman in Derek Mapp last year, after the abrupt departure of Lord Myners. Mapp admitted that the changes in 2014 had "inevitably been disruptive and distracting."
Grayling's operating margin fell from 14.3% in 2013 to 7.7% in 2014 as a result of revenue shortfalls in its key markets of the UK, Europe and US. The agency's revenues declined 6.3% on a like-for-like basis to £70.8m.
With further reorganisation of Grayling expected in 2015, Huntsworth has recognised a £65m impairment charge against the value of the agency's goodwill. Significantly, the group said that it has begun a programme to "close or dispose of underperforming, non-core operations, re-integrate specialist teams and to redeploy resources from infrastructure to client-facing activity," at Grayling.
In particular, Grayling continues to underperform in the UK and Europe, which accounts for 60% of its revenue. Yesterday, the firm announced that it had promoted agency veteran Jan Simunek to oversee Western Europe, excluding the UK and Ireland.
Citigate's value has also been written down, by £6.5m. Revenues at the firm were down 3.7% to £21.9m in 2014, although margin increased slightly to 20.4%. Revenue from Citigate’s London and European businesses declined by around 6%, with Asia-Pacific growing by 6.4%.
UK consumer PR firm Red reported a revenue decline of 4.4% of £12.3m in 2014, with margins down to 20.9% from 24.2% one year earlier. Once again, Huntsworth Health was the star performer, growing 8.4% to £59.7m.
In its outlook for the year ahead, the group admitted to an "unusually turbulent" year in 2014, and added that Taaffe has begun a strategic and operational review of Huntsworth's operations.