Arun Sudhaman 15 Mar 2016 // 8:11AM GMT
LONDON — Huntsworth has reported like-for-like revenue growth of 1.5% for 2015, although profitability again declined amid a widespread restructuring at the PR holding group, which owns Grayling, Citigate and Red Consultancy.
The results mark Huntsworth's first year of growth since 2011, and follow the appointment of Paul Taaffe (pictured) to succeed Lord Chadlington as CEO more than a year ago. The group reported revenue of £168.4m for 2015, up from £164.7m in 2014, and led by 13.7% growth at Huntsworth Health, which is now the group's largest division.
Operating profit, however, dropped from £18.2m in 2014 to £15.3m last year, thanks in large part to significant restructuring costs at flagship agencies Grayling and Citigate, and a related “goodwill impairment” of £48.8m.
"These full year results show Huntsworth returning to modest growth led by Huntsworth Health which delivered double digit revenue growth and is now the largest part of company," said Taaffe. "Afterer a year of significant change, Huntsworth is now well positioned to see the benefits of the restructuring flow through to its results in the coming year."
The group's overall margin was 9.1%, driven down by central costs of £6.9m. Taaffe explained this as "largely due to the dual running of my costs from April with those of my predecessor, Lord Chadlington, who continues to act as special adviser." Huntsworth has, however, effectively dismantled its Asia-Pacific leadership team, with the departures of CEO Chris Tang and chairman Bob Pickard over the past 12 months.
Grayling underwent another difficult year, declining 7.4% on a like-for-like basis to £63.2m, with profits down from £5.4m to £2.6m, a margin of 4.2%. The firm has undergone a realignment of roles across the company, affecting more than 100 positions, in an effort to reduce staff costs. New leadership is now in place in several markets, following the departure of CEO Pete Pedersen more than a year ago.
Grayling has also closed seven offices, while redirecting resources to fast-growing markets in the Middle East and Africa, and significantly restructuring its UK business via a merger with sister firm Atomic. Taaffe said that the rate of revenue decline at Grayling "slowed with each successive quarter," while operating margin "improved with each quarter."
Whilst Grayling's Qatar business is "set to retract", following the loss of the key Qatar Foundation account, Taaffe also noted that 2015 was a "stellar year" for the firm's operations in the Middle East, Africa and Turkey, with particularly growth via African markets. However, he also cautioned against continued "volatility in trading" at the firm.
Significant Grayling UK wins included "wide-ranging work with HSBC" and projects with TFL and the NHS. Grayling US "generated organic growth" with ZTE, along with new business from Dechert LLP, Amadeus, Edmunds.com and Lowe's. In Continental Europe, multi-country accounts now represent over 50% of revenue.
Citigate Dewe Rogerson also declined 7.1% to £20m, with profits down to £3.1m from £4.5m. Red Consultancy, however, returned to growth, up 4.2% to £12.8m, with a 20.3% margin of £2.6m.
Citigate's decrease was attributed to its London office, which dropped 16.9% on a like-for-like basis. "As announced at the half year, price competition for mandates remains strong and in London, the company continues to face a challenging environment, which is reflected in the full year figures," said Taaffe. "A new investment programme, which began in the second half of the year, continues to progress with the aim of strengthening Citigate's positioning, offering and margins."
At Red, meanwhile, a number of high-profile campaigns helped the agency's financial performance. New clients won during 2015 included Crest Nicholson; Heathrow Airport; SlimFast; Listerine and Royal Caribbean cruises.
Huntsworth Health's growth accelerated in the second half of 2015, led by digital consumer firm Evoke Health. Two new digital firms have recently launched — Firsthand and TraverseHealth — with the division also opening new offices in Shanghai and Dubai.
"The full year benefits of the restructuring, along with the introduction of new senior management at a number of our individual agencies and other investment initiatives, leaves the Group well placed to achieve stronger revenue growth and an improved profit performance in 2016," said Taaffe.