Bluefocus H1 results justify international growth focus

Group cites "determined globalisation strategy" for 30 percent top-line growth, but M&A costs hit bottom line

BlueFocus celebrated a new office in Silicon Valley in June
BlueFocus celebrated a new office in Silicon Valley in June

BEIJING and NEW YORK: Bluefocus Communication Group has reported revenue growth of 30 per cent in the first half of 2015, thanks to its "determined globalisation strategy".

International expansion was the main growth engine, contributing 28 per cent of the group's overall first-half revenue of US$547 million (RMB3.5 billion). That amounts to US$156 million (RMB1 billion) from international sources.

Vision7 from Canada was the "building block of revenue contributor", a release stated. 

However, net profit dropped 71.4 per cent year-on-year at US$13.46 million (RMB 86.1 million), due to a "significant increase on finance expenses" from M&A spending. Still, this is a turnaround from a first-quarter deficit, primarily caused by goodwill impairment of the Huntsworth acquisition in April 2013.

Its latest acquisitions within the mainland include Domob, Madhouse and Joy Navigation. The report made no mention of the potential asset purchase that suspended trading of its shares on the Shenzhen Stock Exchange earlier in August.

What is worth noting is that revenue contributed by international businesses has exceeded one-fifth of its revenue for two years now. This is a steady path from 2013 when BlueFocus International was officially established, during which international revenue was "tiny", said its spokesperson.

Bluefocus International has already hit the one-fifth revenue contribution goal set by chairman and CEO Oscar Zhao mid-way into 2015, according to the group.

The group's strategic focus on emerging revenue sources in mobile internet, social media, ad tech, ecommerce, CRM and even product designhave achieved initial success with its portfolio investments in seven overseas companies in the past two years.

To date, BlueFocus remains the only communication group from China that has a global footprint, but its revenue growth will depend on the ability to drive synergy across all its overseas assets as well as offset the slowing economic situation in China.

Its largest competitor WPP, which reported results two days ago, flagged "the Eurozone, Middle East, BRICs' hard or soft landing (particularly now China) and US deficit uncertainties" as factors that still demand caution. 

Bluefocus will be hedging its bets on restructuring its core business units into 'China Business', 'International Business' (operating under Bluefocus International) and 'Strategic Emerging Business', as well as spin off its ecommerce and event planning units.

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