Mixed outlook for top PR firms as financial results are released

Marcoms groups' performance varies, Chime's Lord Bell says 'PR held up better than expected'.

Difficult times: Conditions expected to remain uncertain
Difficult times: Conditions expected to remain uncertain

The three major listed UK marcoms groups painted a contrasting picture of the UK and global PR industry as they posted interim results over the past week.

The most upbeat message came from Chime Communications, owner of Bell Pottinger, which reported first half profits of £9.4m off the back of a seven per cent growth in operating income.

But analysts warned conditions would remain tough for the rest of the year.

Chime's bullish results were driven by the performance of its PR business, which saw operating income rise by ten per cent to £32m and operating profit climb to £6.7m - a growth of 25 per cent year-on-year.

Lord Bell, Chime's chairman, said: 'We are outperforming the sector, but PR has held up stronger than people thought. Spending that has been reduced in advertising has been passed over to PR.'

But this positive picture was muddied by WPP reporting its PR and public affairs revenues dropped by 8.2 per cent in the first half of 2009 on a like-for-like basis. PR and public affairs was harder hit than advertising and media, which dropped by 7.8 per cent.

Similarly Huntsworth saw a 8.4 per cent first-half organic revenue decline in its PR business. Only the performance of its health division, which grew 7.9 per cent, limited its overall organic revenue decline to 4.2 per cent.

Johnathan Barrett, an analyst at Singer Capital Markets, said: 'It would appear that PR is holding up relatively well, but it is still a very difficult market. Chime's performance should be put to one side as an anomaly rather than a representation of market conditions.'

He added that the message coming from most marcoms groups was that these tough conditions would continue through to the end of the year and that, despite the downturn affecting figures in Q4 2008, the last quarter is also likely to see year-on-year decline.

WPP said it saw 'some deterioration' in its PR business compared with the first quarter of this year. WPP CEO Martin Sorrell said: 'We think market conditions are beginning to improve and as we get into 2010 overall revenues will level out.'

Lord Bell acknowledged that the third quarter may also be difficult, but predicted a strong comeback in the fourth quarter.

HOW I SEE IT

- Lord Chadlington, chief executive, Huntsworth

The PR market is now picking up. Our consumer PR is doing very well and financial is beginning to pick up, particularly in North America. We feel good about the way the market looks and think it will be a good second half.

- Lord Bell, Chairman, Chime Communications

PR is the star performer of the group. Government work in the Middle East and US remains strong, as do the corporate and public sector, but financial PR and public affairs remain weak. There may be opportunities for acquisitions and if these arise we are in a position to capitalise.

 

-8.2% - Like-for-like drop in WPP's first half PR revenues

-8.4% - Huntsworth's organic revenue decline PR

+10% - Rise in first half income of Chime's PR business

+470% - Rise in Chime's share price since January.

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