Huntsworth 2015 revenue grows 1.5 per cent despite Grayling decline

Huntsworth returned to "marginal" revenue growth in 2015 after a strong performance of its health arm, although Grayling and Citigate continued to decline and profits failed to recover amid the restructuring process.

Huntsworth CEO Paul Taaffe: "Huntsworth is returning to modest growth"
Huntsworth CEO Paul Taaffe: "Huntsworth is returning to modest growth"

Like-for-like revenue rose 1.5 per cent to £168.4m ($239.5m), with Huntsworth Health up 13.7 per cent to £72.3m ($102.8m) and Red up 4.2 per cent to £12.8m ($18.2m).

However, like-for-like revenue at Grayling fell 7.4 per cent to £63.2m ($89.9m), with that agency now behind Huntsworth Health in revenue terms. Like-for-likes at Citigate fell 7.1 per cent to £20m ($28.5m).

London-based Huntsworth, which has been undergoing a restructure under CEO Paul Taaffe who joined in April 2015, reported a full-year profit before tax and "highlighted items" of £13.3m ($18.9m), down from £16m ($22.8m) in 2014. This figure excludes exceptional costs such as a goodwill impairment charge of £48.8m (2014: £71.5m), and restructuring costs of £3.3m (2014: £1.9m).

Operating loss after highlighted items narrowed from £56.9m ($80.9m) to £37.8m ($53.8m), while operating margin before central costs and highlighted items was 13.1 per cent (2014: 15 per cent).

Taaffe said: "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. After 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."

Divisional breakdown:

Operating profit at Grayling more than halved in the year, from £5.4m ($7.7m) to £2.6m ($3.7m). Margins slid from 7.7 per cent to 4.2 per cent, although Huntsworth said margins "improved every quarter". The firm said Grayling was the focus of the majority of its restructuring activity in 2015, which included the closure of seven offices. It also merged its Grayling Brands arm with Atomic.

The UK business is "already seeing the positive effects of the restructuring", the firm stated, "with some high profile wins". Grayling US generated organic growth with ZTE, the Chinese mobile phone manufacturer, and added several significant wins including Dechert, Amadeus and integrated marketing work for Edmunds.com and Lowe's, the national retailer.

Operating profit at Huntsworth Health, the firm’s health-focused marketing services division, rose from £12.3m ($17.5m) to £13.8m ($19.6m), although operating margin dipped from 20.5 to 19.1 per cent.

Like-for-like revenue growth accelerated in the second half of 2015 to 16.3 per cent (H1: 11 per cent), with growth led by digital consumer agency Evoke Health.

Huntsworth said revenue growth in the division was driven by a combination of expanding key client relationships and "significant new client wins". Its top five clients delivered £29.4m of revenue in 2015, against £20.6m in 2014.

Operating profit at Citigate fell from £4.5m ($6.4m) to £3.1m ($4.4m) in 2015, as margins fell by 20.4 to 15.3 per cent. Citigate's individual businesses performed "very differently" in 2015, Huntsworth said, with like-for-like revenue rising 26.6 per cent in the Netherlands while Citigate's London businesses suffered like-for-like revenue decline of 16.9 per cent and a "sharp drop in operating margins".

At Red, operating profit was flat at £2.6m ($3.7m) and operating margin fell from 20.9 to 20.3 per cent.

Huntsworth said growth came on the back of strong demand for consumer campaigning as well as growth in its corporate and tech services. New clients won during 2015 included housebuilder Crest Nicholson, Heathrow Airport, SlimFast, Listerine and Royal Caribbean cruises.

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